Property Digests (Articles 440 461)
ACCESSION
ARTICLE 440
1. G.R. No. 140528 December 7, 2011
MARIA TORBELA, vs. SPOUSES ANDRES T. ROSARIO and
LENA DUQUE-ROSARIO and BANCO FILIPINO SAVINGS AND
MORTGAGE BANK, Respondents.
G.R. No. 140553
LENA DUQUE-ROSARIO, Petitioner, vs. BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, Respondent
FACTS: Petitioners in GR# 140528 are the Torbela siblings.
Petitioner in GR# 140553 is the nephew of Torbela siblings.
This case involved a parcel of land (LOT 356-A) which was
previously part of LOT 356. Valeriano, the original owner of
the said lot 356, gave lot 356-A to Sps. Torbela. Upon the
death of the Sps. Torbela, petitioners executed a deed of
extrajudicial partition over the lot 356-A.
The petitioners executed a deed of absolute quitclaim in
favor of Dr. Rosario for a consideration of Php 9.00.
Subsequently, Dr. Rosario executed a deed of absolute
quitclaim of Torbela siblings stating that he only borrowed
the lot from Torbela siblings and that he was returning the
same. (notarized but was not annotated on the TCT)
Meanwhile, Dr. Rosario obtained a loan from DBP amounting
to Php 70,200 which was secured by a mortgage on the lot.
Using the proceeds of the loan, he made improvements (4
storey building) on the lot.
Cornelio, on behalf of the Torbela siblings, executed an
Affidavit of adverse claim alleging the quitclaim executed by
Dr. Rosario.
The building was initially used as a hospital but later
converted to a commercial building. Part of the building was
leased to PT&T and the rest to dr. Rosario sister.
Full payment was made to DBP and the mortgage was
cancelled. Dr. Rosario obtained another loan from PNB
amounting to Php 450, 000.00 which was secured by a
mortgaged the same lot. Subsequently, Dr. Rosario obtained
another loan from Banco Filipino amounting to
P1,200,000.00. Banco Filipino paid the loan obtained by Dr.
Rosarion from PNB.
Dr. Rosario failed to pay Banco Filipino. Thus the latter
extrajudicially foreclosed the mortgage and a TCT was issued
in the name of Banco Filipino. The latter filed a writ of
possession before the RTC. Torbela siblings sued Banco
Filipino for annulment of the TCT and recovery against Banco
Filipino.
RTC- ruled in favor of BANCO FILIPINO
CA-AFFIRMED RTCs ruling
ISSUE/S:
1.) WON Torbela siblings are entitled to recover
the lot from BANCO FILIPINO -YES
2.) WON Torbela siblings have right over the
imrpovements made by Dr. ROSARIO. YES
HELD:
1.) Torbela siblings can recover the lot from Banco Filipino.
Banco Filipino is not a mortgagee and buyer in good
faith. It was aware of the annotation of adverse claim on
the title. Banco Filipino cannot be deemed a mortgagee
in good faith, much less a purchaser in good faith at the
foreclosure sale of Lot No. 356-A. Hence, the right of the
Torbela siblings over Lot No. 356-A is superior over that
of Banco Filipino; and as the true owners of Lot No. 356-
A, the Torbela siblings are entitled to a reconveyance of
said property even from Banco Filipino.
2.) The rules on accession shall govern the improvements
on Lot No. 356-A and the rents thereof.
The accessory follows the principal. The right of accession is
recognized under Article 440 of the Civil Code which states
that "[t]he ownership of property gives the right by
accession to everything which is produced thereby, or which
is incorporated or attached thereto, either naturally or
artificially."
There is no question that Dr. Rosario is the builder of the
improvements on Lot No. 356-A. The Torbela siblings
themselves alleged that they allowed Dr. Rosario to register
Lot No. 356-A in his name so he could obtain a loan from
DBP, using said parcel of land as security; and with the
proceeds of the loan, Dr. Rosario had a building constructed
on Lot No. 356-A, initially used as a hospital, and then later
for other commercial purposes. Dr. Rosario supervised the
construction of the building, which began in 1965; fully
liquidated the loan from DBP; and maintained and
administered the building, as well as collected the rental
income therefrom, until the Torbela siblings instituted Civil
Case No. U-4359 before the RTC on February 13, 1986.
When it comes to the improvements on Lot No. 356-A, both
the Torbela siblings (as landowners) and Dr. Rosario (as
builder) are deemed in bad faith. The Torbela siblings were
aware of the construction of a building by Dr. Rosario on Lot
No. 356-A, while Dr. Rosario proceeded with the said
construction despite his knowledge that Lot No. 356-A
belonged to the Torbela siblings. This is the case
contemplated under Article 453 of the Civil Code, which
reads:
ART. 453. If there was bad faith, not only on the
part of the person who built, planted or sowed on
the land of another, but also on the part of the
owner of such land, the rights of one and the other
shall be the same as though both had acted in good
faith.
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It is understood that there is bad faith on the part of
the landowner whenever the act was done with his
knowledge and without opposition on his part.
When both the landowner and the builder are in good faith,
the following rules govern:
ART. 448. The owner of the land on which anything
has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the
one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than
that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the
court shall fix the terms thereof.
ART. 546. Necessary expenses shall be refunded to
every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed
therefor.
Useful expenses shall be refunded only to the
possessor in good faith with the same right of
retention, the person who has defeated him in the
possession having the option of refunding the
amount of the expenses or of paying the increase in
value which the thing may have acquired by reason
thereof.
ART. 548. Expenses for pure luxury or mere pleasure
shall not be refunded to the possessor in good faith;
but he may remove the ornaments with which he
has embellished the principal thing if it suffers no
injury thereby, and if his successor in the possession
does not prefer to refund the amount expended.
Whatever is built, planted, or sown on the land of another,
and the improvements or repairs made thereon, belong to
the owner of the land. Where, however, the planter, builder,
or sower has acted in good faith, a conflict of rights arises
between the owners and it becomes necessary to protect
the owner of the improvements without causing injustice to
the owner of the land. In view of the impracticability of
creating what Manresa calls a state of "forced co-
ownership," the law has provided a just and equitable
solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
indemnity or to oblige the builder or planter to pay for the
land and the sower to pay the proper rent. It is the owner of
the land who is allowed to exercise the option because his
right is older and because, by the principle of accession, he is
entitled to the ownership of the accessory thing.
Property Digests (Articles 440 461)
The landowner has to make a choice between appropriating
the building by paying the proper indemnity or obliging the
builder to pay the price of the land. But even as the option
lies with the landowner, the grant to him, nevertheless, is
preclusive. He must choose one. He cannot, for instance,
compel the owner of the building to remove the building
from the land without first exercising either option. It is only
if the owner chooses to sell his land, and the builder or
planter fails to purchase it where its value is not more than
the value of the improvements, that the owner may remove
the improvements from the land. The owner is entitled to
such remotion only when, after having chosen to sell his
land, the other party fails to pay for the same.
This case then must be remanded to the RTC for the
determination of matters necessary for the proper
application of Article 448, in relation to Article 546, of the
Civil Code. Such matters include the option that the Torbela
siblings will choose; the amount of indemnity that they will
pay if they decide to appropriate the improvements on Lot
No. 356-A; the value of Lot No. 356-A if they prefer to sell it
to Dr. Rosario; or the reasonable rent if they opt to sell Lot
No. 356-A to Dr. Rosario but the value of the land is
considerably more than the improvements. The
determination made by the Court of Appeals in its Decision
dated June 29, 1999 that the current value of Lot No. 356-A
is 1,200,000.00 is not supported by any evidence on record.
Should the Torbela siblings choose to appropriate the
improvements on Lot No. 356-A, the following ruling of the
Court in Pecson v. Court of Appeals is relevant in the
determination of the amount of indemnity under Article 546
of the Civil Code:
Article 546 does not specifically state how the value of the
useful improvements should be determined. The respondent
court and the private respondents espouse the belief that
the cost of construction of the apartment building in 1965,
and not its current market value, is sufficient reimbursement
for necessary and useful improvements made by the
petitioner. This position is, however, not in consonance with
previous rulings of this Court in similar cases. In Javier vs.
Concepcion, Jr., this Court pegged the value of the useful
improvements consisting of various fruits, bamboos, a house
and camarin made of strong material based on the market
value of the said improvements. In Sarmiento vs. Agana,
despite the finding that the useful improvement, a
residential house, was built in 1967 at a cost of between
eight thousand pesos (8,000.00) to ten thousand pesos
(10,000.00), the landowner was ordered to reimburse the
builder in the amount of forty thousand pesos (40,000.00),
the value of the house at the time of the trial. In the same
way, the landowner was required to pay the "present value"
of the house, a useful improvement, in the case of De
Guzman vs. De la Fuente, cited by the petitioner.
The objective of Article 546 of the Civil Code is to administer
justice between the parties involved. In this regard, this
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Court had long ago stated in Rivera vs. Roman Catholic
Archbishop of Manila that the said provision was formulated
in trying to adjust the rights of the owner and possessor in
good faith of a piece of land, to administer complete justice
to both of them in such a way as neither one nor the other
may enrich himself of that which does not belong to him.
Guided by this precept, it is therefore the current market
value of the improvements which should be made the basis
of reimbursement. A contrary ruling would unjustly enrich
the private respondents who would otherwise be allowed to
acquire a highly valued income-yielding four-unit apartment
building for a measly amount. Consequently, the parties
should therefore be allowed to adduce evidence on the
present market value of the apartment building upon which
the trial court should base its finding as to the amount of
reimbursement to be paid by the landowner.
Still following the rules of accession, civil fruits, such as
rents, belong to the owner of the building. Thus, Dr. Rosario
has a right to the rents of the improvements on Lot No. 356-
A and is under no obligation to render an accounting of the
same to anyone. In fact, it is the Torbela siblings who are
required to account for the rents they had collected from
the lessees of the commercial building and turn over any
balance to Dr. Rosario. Dr. Rosarios right to the rents of the
improvements on Lot No. 356-A shall continue until the
Torbela siblings have chosen their option under Article 448
of the Civil Code. And in case the Torbela siblings decide to
appropriate the improvements, Dr. Rosario shall have the
right to retain said improvements, as well as the rents
thereof, until the indemnity for the same has been paid.
ARTICLE 442
1. G.R. No. 35223 September 17, 1931
THE BACHRACH MOTOR CO., INC., plaintiff-appellee, vs.
TALISAY-SILAY MILLING CO., ET AL., defendants-appellees.
THE PHILIPPINE NATIONAL BANK, intervenor-appellant.
Summary of facts (found in the ruling part): talisay-silay
milling was indebted to PNB. To secure payment of its debt,
it suceeded in inducing its planter, Ledesma, to mortgage his
land to PNB. To compensate Ledesma for the risk of
mortgaging his property, Talisay Milling undertook to credit
Ledesma with a sum equal to 2% of the debt secured
according to the yearly balance the payment of the bonus
being paid at once, or in part from time to time, as soon as
Talisay Milling would be free from its obligations from PNB.
Facts: Bachrach Motor Co., Inc.filed a case against the
Talisay-Silay Milling Co., Inc., for the delivery of the amount
P13,850 or promissory notes or other instruments or credit
for that sum payable on June 30, 1930, as bonus in favor of
Mariano Lacson Ledesma.
The Philippine National Bank filed a third party claim alleging
a preferential right to receive any amount which Mariano
Lacson Ledesma might be entitled to from the Talisay-Silay
Property Digests (Articles 440 461)
Milling Co. as bonus, because that would be civil fruits of the
land mortgaged to said bank by said debtor for the benefit of
the central.
The corporation Talisay-Silay Milling Co., Inc., answered the
complaint stating that of Mariano Lacson Ledesma's credit,
P7,500 belonged to Cesar Ledesma because he had
purchased it, and praying that it be absolved from the
complaint and that the proper party be named so that the
remainder might be delivered.
Cesar Ledesma, in turn, claiming to be the owner by
purchase in good faith and for a reconsideration of the
P7,500 which is a part of the credit referred to above,
answered praying that he be absolved from the complaint.
The plaintiff Bachrach Motor Co., Inc., answered the third
party claim alleging that its credit against Mariano Lacson
Ledesma was prior and preferential to that of the
intervening bank, and praying that the latter's complaint be
dismissed.
At the trial all the parties agreed to recognize and respect
the sale made in favor of Cesar Ledesma of the P7,500 part
of the credit in question, for which reason the trial court
dismissed the complaint and cross-complaint against Cesar
Ledesma authorizing the defendant central to deliver to him
the aforementioned sum of P7,500. And upon conclusion of
the hearing, the court held that the Bachrach Motor Co.,
Inc., had a preferred right to receive the amount of
P11,076.02 which was Mariano Lacson Ledesma's bonus,
and it ordered the defendant central to deliver said sum to
the plaintiff.
Issue: whether or not the bonus in question is civil fruits.
Ruling: NO. Article 355 of the Civil Code considers three
things as civil fruits:
First, the rents of buildings;
second, the proceeds from leases of lands; and,
third, the income from perpetual or life annuities, or other
similar sources of revenue.
It may be noted that according to the context of the law, the
phrase "u otras analogas" refers only to rent or income, for
the adjectives "otras" and "analogas" agree with the
noun "rentas," as do the other adjectives "perpetuas"
and "vitalicias." That is why we say that by "civil fruits" the
Civil Code understands one of three and only three things, to
wit: the rent of a building, the rent of land, and certain kinds
of income.
As the bonus in question is not rent of a building or of land,
the only meaning of "civil fruits" left to be examined is that
of "income."
Assuming that in broad juridical sense of the word "income"
it might be said that the bonus in question is "income" under
article 355 of the Civil Code, it is obvious to inquire whether
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it is derived from the land mortgaged by Mariano Lacson
Ledesma to the appellant bank for the benefit of the central;
for it is not obtained from that land but from something else,
it is not civil fruits of that land, and the bank's contention is
untenable.
It is to be noted that the said bonus bears no immediate, but
only a remote accidental relation to the land mentioned,
having been granted as compensation for the risk of having
subjected one's land to a lien in favor of the bank, for the
benefit of the entity granting said bonus. If this bonus be
income or civil fruits of anything, it is income arising from
said risk, or, if one chooses, from Mariano Lacson Ledesma's
generosity in facing the danger for the protection of the
central, but certainly it is not civil fruits or income from the
mortgaged property, which, as far as this case is concerned,
has nothing to do with it. Hence, the amount of the bonus,
according to the resolution of the central granting it, is not
based upon the value, importance or any other circumstance
of the mortgaged property, but upon the total value of the
debt thereby secured, according to the annual balance,
which is something quite distinct from and independent of
the property referred to.
ARTICLE 443
1. G.R. No. L-30240 August 23, 1929
AQUILINA TACAS, ET AL., plaintiffs-appellees, vs.
EVARISTO TOBON, defendant-appellant.
FACTS: This is an action to recover from the defendant the
ownership and possession of three parcels of land described
in the sketch attached to the complaint, together with the
fruits collected by him during the time he was in possession
of said land that is, since January, 1912, it being alleged that
the defendant unlawfully took said parcels upon the death
of Francisco Dumadag, predecessor in interest of the
plaintiffs; and that he remained in possession, enjoying the
fruits to the value of P700 annually.
In his answer the defendant alleges that he is the owner of
said lands, having purchased from one Exequiel or Gil Tacas,
deceased, about fifteen years before the amended answer
dated December 5, 1924.
At the trial the parties adduced their respective evidence,
and thereafter the trial court declared it sufficiently proven
by a preponderance of the evidence that the three parcels of
land under discussion, were parts of an estate belonging to
Francisco Dumadag, whose title is a possessory information
recorded in the registry of deeds of Ilocos Sur, having
inherited them from his parents (Exhibit H); that during his
lifetime, said Francisco Dumadag was in possession of the
land as owner from many years, until his death on
November 17, 1911, enjoying its fruits, consisting in rice,
corn, tobacco, and vegetables; that said Francisco Dumadag
had filed a declaration for tax purposes in his own name;
that the land tax had been paid by Francisco Dumadag
Property Digests (Articles 440 461)
during the years 1908 and 1911, and in his name in the years
from 1912 to 1914 (Exhibits I to P); that in January, 1912,
during the season for planting tobacco immediately
following the death of Francisco Dumadag, Evaristo Tobon
took possession of the three parcels of land in question
planting them with tobacco; that from 1912 up to the
present, the defendant Evaristo Tobon has been collecting
the fruits therefrom, consisting of 300 sheaves of rice and
300 manos of first, second, and third-class tobacco each
year, at the approximate rate of P0.30 for each sheaf of rice,
and P 3 for each mano of first-class tobacco, P 2.50 for
second-class tobacco, and P 2 for third-class tobacco. There
is no evidence of record regarding the amount and price of
the corn collected by the defendant. And by virtue thereof,
the trial court declared the plaintiffs to be the absolute
owners of the three parcels of land in litigation, and ordered
the defendant Evaristo Tobon to deliver said parcels of land
to the plaintiffs, together with the fruits collected each year
since 1912 until the complete termination of this case, and
in default thereof, to pay to said plaintiffs the sum of P
11,040, which is the total value of the rice and tobacco from
1912 to 1927, at P 0.30 per sheaf of rice, and P 2
per mano of tobacco. From this judgment, the defendant
duly appealed in time, prosecuting his appeal to this court by
the proper bill of exceptions.
The appellant had made several assignments of error. In the
first place, he contends that the identity of the pieces of land
in litigation has not been established. We find no merit in
this contention. It appears from the allegations of the
complaint and the answer, that the case refers to the lands
held by defendant and alleged by the latter to have been
purchased from one Exequiel or Gil Tacas, brother to the
plaintiff Aquilina Tacas.
With regard to the probatory value of the documents
presented by the parties, to wit, Exhibit H of the plaintiffs,
and Exhibits 1 and 2 of the defendant, it is well to note that
Exhibit H is a possessory information record duly approved
on March 22, 1895 and inscribed in the registry of deeds of
Ilocos Sur on November 4, 1917 in favor of Francisco
Dumadag, covering some land situated in the sitio of Sisin,
municipality of Magsingal, Ilocos Sur.
ISSUE: WON the trial court erred in ordering Tobon to deliver
to the plaintiffs the fruits of the land from 1912 to 1927?
RULING: Yes, the trial court erred insofar that it ordered
Tobon to deliver to the plaintiffs the fruits of the land from
1912 to 1927.
Evidence being lacking to show that when he entered upon
the possession of the lands in question, he was aware of any
flaw in his title or mode of acquiring it, he is deemed a possessor
in good faith (Art. 433, Civil Code), and in accordance with
Art. 451 of the Civil Code, the fruits of said lands were his,
until he was summoned upon the complaint, or until he has
filed his answer thereto.
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Manresa commented that to every possessor in good faith,
there comes a time when he is considered a possessor in bad
faith. When the owner or possessor with a better right
comes along where he becomes aware that what he had
taken for granted is at least doubtful, and when he learns
the grounds in support of the adverse contention, good faith
ceases.
The possessor may still believe that his right is more secure,
because we resign ourselves with difficulty to the sight of
our vanishing hopes; but when the final judgment of the
court deprives him of the possession, all illusion necessarily
disappears.
Although he may not have been convinced of it before, the
possessor becomes aware that his possession is unlawful
from the time he learns of the complaint, from the time he is
summoned to the trial. It is at this time that his possession is
interrupted, according to article 1945, and that he ceases to
receive the fruits, according to the first paragraph of article
451. The ruling of the court retroacts to that time; but shall
good faith be deemed to cease then ? Although there is a
great difference between requiring the possessor in good
faith to return the fruits he received from the time when his
possession was legally interrupted, and considering him a
possessor in bad faith for all legal purposes from that time,
the law had to establish a definite rule in the matter, which
is none other than that deducible from a combination of
articles 452, 1945 and 435. Whether or not the defendant be
a possessor in bad faith, for there is no doubt that he can be,
and the law makes no attempt to deny it, from the service of
judicial summons, there exists an act that this possessor
knows that his right is not secure, that someone disputes it,
and that he may yet lose it; and if the court holds that
restitution be made, that time determines all the legal
consequences of the interruption, the time when the
possession in good faith ceased to be so before the law.
By virtue of the foregoing, the judgment appealed from must
be, as it is hereby, affirmed in so far as it holds that the
plaintiffs are the owners of the lands in question, and that
the defendant is bound to return to them the former.
And with regard to the award of damages, said judgment is
hereby modified so that the defendant is only bound to
return to the plaintiffs the fruits received from April, 1918 to
1927, that is, 300 sheaves of rice and 300 manos of tobacco,
with the right to deduct the expenses of planting and
harvesting (art. 365 of the Civil Code), which shall be
determined by the trial court, after hearing both parties.
2. G.R. No. L-19614 March 27, 1971
JESUS M. GABOYA, as Administrator of the Estate of DON
MARIANO CUI, plaintiff-appellant, vs. ANTONIO MA. CUI,
MERCEDES CUI-RAMAS and GIL RAMAS, defendants-
appellees, JESUS MA. CUI, JOSE MA. CUI, SERAFIN MA. CUI,
JORGE MA. CUI, ROSARIO CUI DE ENCARNACION, PRECILLA
Property Digests (Articles 440 461)
C. VELEZ, and LOURDES C. VELEZ, intervenors-appellants,
VICTORINO REYNES, defendant-in-counterclaim-appellee.
FACTS: Don Mariano Cui, widower, as owner of lots Nos.
2312, 2313 and 2319 situated in the City of Cebu, sold said
three lots to three of his children named Rosario C. de
Encarnacion, Mercedes C. de Ramas and Antonio Ma.
Cui, pro indiviso for the sum of P64,000. Because Rosario C.
de Encarnacion for lack of funds was unable to pay her
corresponding share of the purchase price, the sale to her
was cancelled and the one-third of the property
corresponding to her was returned to the vendor. Because
of the sale of these lots pro indiviso and because of the
cancellation of the sale to one of the three original vendees,
Don Mariano and his children Mercedes and Antonio
became co-owners of the whole mass in equal portions.
Sometime after the sale to Mercedes and Antonio the two
applied to the Rehabilitation Finance Corporation (RFC) for a
loan of P130,000 with which to construct a 12-door
commercial building presumably on a portion of the entire
parcel corresponding to their share. In order to facilitate the
granting of the loan and inasmuch as only two of the three
co-owners applied for the loan, Don Mariano on January 7,
1947, executed an authority to mortgage (Annex U)
authorizing his two children co-owners to mortgage his
share.
The loan was eventually granted and was secured by a
mortgage on the three lots in question, Don Mariano being
included as one of the three mortgagors and signing the
corresponding promissory note with his two co-owners.
Two other children of Don Mariano named Jesus and Jorge
brought an action (Civil case No. 599R) in the Court of First
Instance of Cebu for the purpose of annulling the deed of
sale of the three lots in question on the ground that they
belonged to the conjugal partnership of Don Mariano and his
deceased wife Antonia Perales. Thereafter, plaintiffs Jesus
and Jorge applied for the appointment of a receiver to take
charge of the lots and of the rentals of the building. This
petition was denied on November 8, 1948.
Rosario C. Encarnacion, that daughter of Don Mariano who
was one of the original vendees, filed a petition to declare
her father incompetent and to have a guardian appointed
for his property, in Special Proceeding No. 481-R of the Court
of First Instance of Cebu. In May 1949 the petition was
granted and Don Mariano was declared incompetent and
Victorino Reynes was appointed guardian of his property
This third case now before Us was started by the erstwhile
guardian of Don Mariano Cui (while the latter was still alive)
in order to recover P126,344.91 plus legal interest from
Antonio Cui and Mercedes Cui (Record on Appeal, pages 2-3)
apparently as fruits due to his ward by virtue of his usufruct.
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The complaint alleges that the usufructuary right reserved in
favor of Don Mariano Cui extends to and includes the rentals
of the building constructed by Antonio Cui and Mercedes Cui
on the land sold to them by their father; that the defendants
retained those rentals for themselves; that the usufructuary
rights of the vendor were of the essence of the sale, and
their violation entitled him to rescind (or resolve) the sale.
ISSUE: Whether the usufruct reserved by the vendor in the
deed of sale, over the lots in question that were at the time
vacant and unoccupied, gave the usufructuary the right to
receive the rentals of the commercial building constructed
by the vendees with funds borrowed from the Rehabilitation
and Finance Corporation, the loan being secured by a
mortgage over the lots sold.
RULING: NO. The court finds no the decision appealed from.
As therein pointed out, the terms of the 1946 deed of sale of
the vacant lots in question made by the late Don Mariano
Cui in favor of his three children, Rosario, Mercedes and
Antonio Cui, in consideration of the sum of P64,000.00 and
the reserved usufruct of the said lot in favor of the vendor,
as amplified by the deed of 7 January 1947, authorizing
Mercedes, and Antonio Cui to borrow money, with the
security of a mortgage over the entirety of the lots, in order
to enable them to construct a house or building thereon
provided, however, that the rents of said
land shall not be impaired and will always
received by me.
clearly prove that the reserved usufruct in favor of the
vendor, Mariano Cui, was limited to the rentals of the land
alone. Had it been designed to include also the rents of the
buildings intended to be raised on the land, an express
provision would have been included to the effect, since in
both documents (heretofore quoted) the possibility of such
construction was clearly envisaged and mentioned.
Under the articles of the Civil Code on industrial accession by
modification on the principal land (Articles 445 to 456 of the
Civil Code) such accession is limited either to buildings
erected on the land of another, or buildings constructed by
the owner of the land with materials owned by someone
else.
Thus, Article 445, establishing the basic rule of industrial
accession, prescribes that
Whatever is built, planted or sown on the land of
another, and the improvements or repairs made
thereon, belong to the owner of the land subject to the
provisions of the following articles.
while Article 449 states:
He who builds, plants or sows in bad faith
on the land of another, loses what is built,
planted or sown without right to
indemnity.
Articles 447 and 445, in turn, treat of accession produced by
the landowner's building, planting and sowing "with the
Property Digests (Articles 440 461)
materials of another" and when "the materials, plants or
seeds belong to a third person other than the landowner or
the builder, planter or sower.
Nowhere in these articles on industrial accession is there any
mention of the case of landowner building on his own land
with materials owned by himself (which is the case of
appellees Mercedes and Antonio Cui). The reason for the
omission is readily apparent: recourse to the rules of
accession are totally unnecessary and inappropriate where
the ownership of land and of the, materials used to build
thereon are concentrated on one and the same person. Even
if the law did not provide for accession the land-owner
would necessarily own the building, because he has paid for
the materials and labor used in constructing it. We deem it
unnecessary to belabor this obvious point.
Appellants urge, in support of their stand, that the loan .for
the construction of the building was obtained upon the
security of a mortgage not only upon the share of appellees
but also upon the undivided interest of Don Mariano Cui in
the lots in question. That factor is irrelevant to the
ownership of the building, because the money used for the
building was loaned exclusively to the appellees, and they
were the ones primarily responsible for its repayment. Since
the proceeds of the loan was exclusively their property, 1 the
building constructed with the funds loaned is likewise their
own. A mortgagor does not become directly liable for the
payment of the loan secured by the mortgage, in the
absence of stipulation to that effect; and his subsidiary role
as guarantor does not entitle him to the ownership of the
money borrowed, for which the mortgage is mere security.
ARTICLE 447
1. G.R. No. L-21783 November 29, 1969
PACIFIC FARMS, INC., plaintiff-appellee, vs.
SIMPLICIO G. ESGUERRA, ET AL., defendants,
CARRIED LUMBER COMPANY, defendant-appellant.
FACTS: Company sold and delivered lumber and construction
materials to the Insular Farms, Inc. which the latter used in
the construction of the aforementioned six buildings at its
compound in Bolinao, Pangasinan, of the total procurement
price of P15,000, the sum of P4,710.18 has not been paid by
Insular Farms, Inc. Consequently, the Company instituted
civil case D-775 with the Court of First Instance of
Pangasinan to recover the said unpaid balance from the
Insular Farms, Inc. The trial court rendered judgment
sustaining the Company's claim. The writ of execution was
issued. Defendant sheriff levied upon the six buildings. The
Pacific Farms, Inc. filed a third-party claim, subscribed by its
corporate president, asserting ownership over the levied
buildings which it had acquired from the Insular Farms, Inc.
by virtue of a deed of absolute sale executed about seven
months before the Company filed the above-mentioned
action (civil case D-7750.
6

Pacific Farms, Inc. filed a complaint against the Company and
the sheriff with the court a quo, praying that judgment be
rendered, (a) declaring null and void the levy and judicial
sale of the six buildings, and (b) adjudging the defendants
jointly and severally liable to the plaintiff in the sum of
P2,000 by way of actual damages and for such amount as
the court may deem proper and just to impose by way of
exemplary damages and for costs of the suit.
Trial, the court a quo on May 30, 1963 rendered judgment
annulling the levy and the certificate of sale.
ISSUE: Whether or not Article 447 of the new civil code is
applicable.
RULING: YES! Application by analogy of the rules of
accession would suffice for just adjudication.
Article 447 of the Civil Code1 provides:
The owner of the land who makes thereon personally or
through another, plantings, constructions or works with
the materials of another, shall pay their value; and, if he
acted in bad faith, he shall also be obliged to the
reparation of damages. The owner of the materials shall
have the right to remove them only in case he can do so
without injury to the work constructed, or without the
plantings, constructions or works being destroyed.
However, if the landowner acted in bad faith, the owner
of the materials may remove them in any event with a
right to be indemnified for damages.
The abovequoted legal provision contemplates a principal
and an accessory, the land being considered the principal,
and the plantings, constructions or works, the accessory. The
owner of the land who in good faith whether personally
or through another makes constructions or works
thereon, using materials belonging to somebody else,
becomes the owner of the said materials with the obligation
however of praying for their value.2 The owner of the
materials, on the other hand, is entitled to remove them,
provided no substantial injury is caused to the landowner.
Otherwise, he has the right to reimbursement for the value
of his materials.
Although it does not appear from the records of this case
that the land upon which the six buildings were built is
owned by the appellee, nevertheless, that the appellee
claims that it owns the six buildings constructed out of the
lumber and construction materials furnished by the
appellant, is indubitable. Therefore, applying article 447 by
analogy, we perforce consider the buildings as the principal
and the lumber and construction materials that went into
their construction as the accessory. Thus the appellee, if it
does own the six buildings, must bear the obligation to pay
for the value of the said materials; the appellant which
apparently has no desire to remove the materials, and, even
if it were minded to do so, cannot remove them without
necessarily damaging the buildings has the corresponding
Property Digests (Articles 440 461)
right to recover the value of the unpaid lumber and
construction materials.
Well-established in jurisprudence is the rule that
compensation should be borne by the person who has been
benefited by the accession.3 No doubt, the appellee
benefited from the accession, i.e., from the lumber and
materials that went into the construction of the six buildings.
It should therefore shoulder the compensation due to the
appellant as unpaid furnisher of materials.
Moreover, Antonio Araneta was in bad faith. During the trial
of civil case D-775 the Insular Farms, Inc. was represented by
Attorney Amado Santiago, Jr. of the law firm of J. Antonio
Araneta. The latter was one of the counsels of the Pacific
Farms, Inc. The appellee cannot claim ignorance of the
pendency of civil case D-775 because the Insular Farms, Inc.
was defended by the same lawyer from the same law firm
that commenced the present action. J. Antonio Araneta, as
counsel for the Pacific Farms, Inc., cannot close his eyes to
facts of which he as president of the Insular Farms, Inc. had
actual knowledge.
Thus, the appellant acted correctly in bringing an action (D-
775) against the Insular Farms, Inc. and enforcing its right of
reimbursement through the execution of the final judgment
it obtained in the said case against the six buildings in the
possession of the appellee who now stands to benefit
therefrom. It follows, as a necessary corollary, that the sale
at public auction conducted by the defendant sheriff of the
six buildings described in the certificate of sale dated
February 12, 1962, exhibit 7, was valid and effective.
A MOTION FOR RECONSIDERATION
G.R. No. L-21783 March 25, 1970
PACIFIC FARMS, INC., plaintiff-appellee, vs.
SIMPLICIO G. ESGUERRA, ET AL., defendants, CARRIED
LUMBER COMPANY, defendant-appellant
Under the overall environmental circumstances of the case,
considering that although the appellee was in a better
position to protect its own interest it took no action to
intervene in the suit filed by the appellant against the Insular
Farms, Inc. or to hold the latter to account therefor,
notwithstanding that it concededly acquired knowledge,
after its purchase from the Insular Farms, Inc., on March 21,
1958 of the six buildings in question; of the filing and
pendency of the appellant's suit for payment of the unpaid
balance of the price of the lumber and construction
materials delivered to the Insular Farms, Inc. and used in the
construction of the said buildings, the Court believes that its
decision upholding the sheriff's sale of the six buildings but
granting the appellee the option of redeeming the same by
paying to the appellant the unpaid balance with interest
owing to it as supplier of the construction materials, is
completely in consonance with justice and equity.
7

ACCORDINGLY, the plaintiff-appellee's motion for
reconsideration dated December 12, 1969 is hereby denied.
ARTICLE 448
1. G.R. No. 79688 February 1, 1996
PLEASANTVILLE DEVELOPMENT
CORPORATION, petitioner, vs. COURT OF APPEALS, WILSON
KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED
JARDINICO, respondents.
FACTS: Edith Robillo purchased from petitioner a parcel of
land designated as Lot 9, Phase II and located at Taculing
Road, Pleasantville Subdivision, Bacolod City. In 1975,
respondent Eldred Jardinico bought the rights to the lot from
Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the
Register of Deeds of Bacolod City on December 19, 1978
Transfer Certificate of Title No. 106367 in his name. It was
then that he discovered that improvements had been
introduced on Lot 9 by respondent Wilson Kee, who had
taken possession thereof.
It appears that on March 26, 1974, Kee bought on
installment Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI), the exclusive real estate agent of
petitioner. After the preparation of the lot plan and a copy
thereof given to Kee, CTTEI through its employee, Zenaida
Octaviano, accompanied Kee's wife, Donabelle Kee, to
inspect Lot 8. Unfortunately, the parcel of land pointed by
Octaviano was Lot 9. Thereafter, Kee proceeded to construct
his residence, a store, an auto repair shop and other
improvements on the lot.
Jardinico's lawyer wrote Kee, demanding that the latter
remove all improvements and vacate Lot 9. When Kee
refused to vacate Lot 9, Jardinico filed with the Municipal
Trial Court in Cities, Branch 3, Bacolod City (MTCC), a
complaint for ejectment with damages against Kee.
LOWER COURT
MTCC found that petitioner had already rescinded its
contract with Kee over Lot 8 for the latter's failure to pay the
installments due, and that Kee had not contested the
rescission. The rescission was effected in 1979, before the
complaint was instituted. The MTCC concluded that Kee no
longer had any right over the lot subject of the contract
between him and petitioner.
RTC
On appeal, the Regional Trial Court, Branch 48, Bacolod City
(RTC) ruled that petitioner and CTTEI were not at fault or
were not negligent, there being no preponderant evidence
to show that they directly participated in the delivery of Lot
9 to Kee5 . It found Kee a builder in bad faith.
CA
Property Digests (Articles 440 461)
The appellate court ruled that Kee was a builder in good
faith, as he was unaware of the "mix-up" when he began
construction of the improvements on Lot 8. It further ruled
that the erroneous delivery was due to the negligence of
CTTEI, and that such wrong delivery was likewise imputable
to its principal, petitioner herein.
ISSUE: Whether or not Kee was a builder in good faith.
RULING: YES! Good faith consists in the belief of the builder
that the land he is building on is his and his ignorance of any
defect or flaw in his title 9 . And as good faith is presumed,
petitioner has the burden of proving bad faith on the part of
Kee 10 .
At the time he built improvements on Lot 8, Kee believed
that said lot was what he bought from petitioner. He was not
aware that the lot delivered to him was not Lot 8. Thus,
Kee's good faith. Petitioner failed to prove otherwise.
The roots of the controversy can be traced directly to the
errors committed by CTTEI, when it pointed the wrong
property to Wilson Kee and his wife. It is highly improbable
that a purchaser of a lot would knowingly and willingly build
his residence on a lot owned by another, deliberately
exposing himself and his family to the risk of being ejected
from the land and losing all improvements thereon, not to
mention the social humiliation that would follow. He went to
the subdivision developer's agent and applied and paid for
the relocation of the lot, as well as for the production of a lot
plan by CTTEI's geodetic engineer. Upon Kee's receipt of the
map, his wife went to the subdivision site accompanied by
CTTEI's employee, Octaviano, who authoritatively declared
that the land she was pointing to was indeed Lot 8. Having
full faith and confidence in the reputation of CTTEI, and
because of the company's positive identification of the
property, Kee saw no reason to suspect that there had been
a misdelivery.
2. G.R. Nos. 154391-92 September 30, 2004
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs.
Spouses VICENTE and ROSARIO MACASAET, respondents.
FACTS: Petitioners Ismael and Teresita 5 Macasaet and
Respondents Vicente and Rosario Macasaet are first-degree
relatives. Ismael is the son of respondents, and Teresita is his
wife.
On December 10, 1997, the parents filed with the Municipal
Trial Court in Cities (MTCC) of Lipa City an ejectment suit
against the children.7 Respondents alleged that they were
the owners of two (2) parcels of land covered by Transfer
Certificate of Title (TCT) Nos. T-78521 and T-103141, situated
at Banay-banay, Lipa City; that by way of a verbal lease
agreement, Ismael and Teresita occupied these lots in March
1992 and used them as their residence and the situs of their
construction business; and that despite repeated demands,
petitioners failed to pay the agreed rental of 500 per week.
8

Ismael and Teresita denied the existence of any verbal lease
agreement. They claimed that respondents had invited them
to construct their residence and business on the subject lots
in order that they could all live near one other, employ
Marivic (the sister of Ismael), and help in resolving the
problems of the family.9 They added that it was the policy of
respondents to allot the land they owned as an advance
grant of inheritance in favor of their children. Thus, they
contended that the lot covered by TCT No. T-103141 had
been allotted to Ismael as advance inheritance. On the other
hand, the lot covered by TCT No. T-78521 was allegedly
given to petitioners as payment for construction materials
used in the renovation of respondents house.
LOWER COURT
The MTCC11 ruled in favor of respondents and ordered
petitioners to vacate the premises.
RTC
On appeal, the regional trial court15 (RTC) upheld the
findings of the MTCC. However, the RTC allowed
respondents to appropriate the building and other
improvements introduced by petitioners, after payment of
the indemnity provided for by Article 448 in relation to
Articles 546 and 548 of the Civil Code.
CA
The CA sustained the finding of the two lower courts that
Ismael and Teresita had been occupying the subject lots only
by the tolerance of Vicente and Rosario.19 Thus, possession
of the subject lots by petitioners became illegal upon their
receipt of respondents letter to vacate it.
ISSUE: Whether or not Article 1678 of the Civil Code should
apply to the case on the matters of improvements, or is it
Article 447 of the Civil Code in relation to the Article 453 and
454 thereof that should apply, if ever to apply the Civil Code
RULING: Articles 447 and 1678 of the Civil Code is not
applicable.
Accession refers to the right of the owner to everything that
is incorporated or attached to the property.60 Accession
industrial -- building, planting and sowing on an immovable -
- is governed by Articles 445 to 456 of the Civil Code. Article
447 is not applicable, because it relates to the rules that
apply when the owner of the property uses the materials of
another. It does not refer to the instance when a possessor
builds on the property of another, which is the factual milieu
here.
Article 448 Applicable
On the other hand, when a person builds in good faith on
the land of another, the applicable provision is Article 448,
which reads:64
"Article 448. The owner of the land on which anything
has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or
Property Digests (Articles 440 461)
planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof."
This Court has ruled that this provision covers only cases in
which the builders, sowers or planters believe themselves to
be owners of the land or, at least, to have a claim of title
thereto.65 It does not apply when the interest is merely that
of a holder, such as a mere tenant, agent or
usufructuary.66 From these pronouncements, good faith is
identified by the belief that the land is owned; or that -- by
some title -- one has the right to build, plant, or sow
thereon.
However, in some special cases, this Court has used Article
448 by recognizing good faith beyond this limited definition.
Thus, in Del Campo v. Abesia, 68 this provision was applied to
one whose house -- despite having been built at the time he
was still co-owner -- overlapped with the land of
another.69 This article was also applied to cases wherein a
builder had constructed improvements with the consent of
the owner. The Court ruled that the law deemed the builder
to be in good faith.70 In Sarmiento v. Agana,71 the builders
were found to be in good faith despite their reliance on the
consent of another, whom they had mistakenly believed to
be the owner of the land.
Based on the aforecited special cases, Article 448 applies to
the present factual milieu. The established facts of this case
show that respondents fully consented to the improvements
introduced by petitioners. In fact, because the children
occupied the lots upon their invitation, the parents certainly
knew and approved of the construction of the improvements
introduced thereon.73 Thus, petitioners may be deemed to
have been in good faith when they built the structures on
those lots.
The instant case is factually similar to Javier v. Javier.74 In
that case, this Court deemed the son to be in good faith for
building the improvement (the house) with the knowledge
and consent of his father, to whom belonged the land upon
which it was built. Thus, Article 44875 was applied.
3. G.R. No. 170923 January 20, 2009
SULO SA NAYON, INC. and/or PHILIPPINE VILLAGE HOTEL,
INC. and JOSE MARCEL E. PANLILIO,Petitioners, vs. NAYONG
PILIPINO FOUNDATION, Respondent.
FACTS: Respondent Nayong Pilipino Foundation, a
government-owned and controlled corporation, is the owner
of a parcel of land in Pasay City, known as the Nayong
9

Pilipino Complex. Petitioner Philippine Village Hotel, Inc.
(PVHI), formerly called Sulo sa Nayon, Inc., is a domestic
corporation duly organized and existing under Philippine
laws. Petitioner Jose Marcel E. Panlilio is its Senior Executive
Vice President.
On June 1, 1975, respondent leased a portion of the Nayong
Pilipino Complex, consisting of 36,289 square meters, to
petitioner Sulo sa Nayon, Inc. for the construction and
operation of a hotel building, to be known as the Philippine
Village Hotel. The lease was for an initial period of 21 years,
or until May 1996. It is renewable for a period of 25 years
under the same terms and conditions upon due notice in
writing to respondent of the intention to renew at least 6
months before its expiration. Thus, on March 7, 1995,
petitioners sent respondent a letter notifying the latter of
their intention to renew the contract for another 25 years.
On July 4, 1995, the parties executed a Voluntary Addendum
to the Lease Agreement. Petitioners defaulted in the
payment of their monthly rental. Respondent repeatedly
demanded petitioners to pay the arrears and vacate the
premises.
Lower Court
Respondent filed a complaint for unlawful detainer before
the MeTC of Pasay City. MeTC rendered its decision in favor
of respondent.
RTC
Petitioners appealed to the RTC which modified the ruling of
the MeTC.
CA
Respondent appealed to the CA which held that the RTC
erroneously applied the rules on accession, as found in
Articles 448 and 546 of the Civil Code when it held that
petitioners were builders in good faith and, thus, have the
right to indemnity.
ISSUE: Whether petitioners were builders in good faith over
the substantial and valuable improvements which they had
introduced on the subject property, thus compelling the
application of article 448 of the civil code in relation to
article 546 of the same code, instead of article 1678 of the
civil code.
RULING: No. Art. 448. The owner of the land on which
anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the
Property Digests (Articles 440 461)
lease and in case of disagreement, the court shall fix the
terms thereof.
Art. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain
the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who
has defeated him in the possession having the option of
refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by
reason thereof.
This article [Article 448] is manifestly intended to apply only
to a case where one builds, plants, or sows on land in which
he believes himself to have a claim of title, 10 and not to lands
where the only interest of the builder, planter or sower is
that of a holder, such as a tenant.
In the case at bar, petitioners have no adverse claim or title
to the land. In fact, as lessees, they recognize that the
respondent is the owner of the land. What petitioners insist
is that because of the improvements, which are of
substantial value, that they have introduced on the leased
premises with the permission of respondent, they should be
considered builders in good faith who have the right to
retain possession of the property until reimbursement by
respondent.
We affirm the ruling of the CA that introduction of valuable
improvements on the leased premises does not give the
petitioners the right of retention and reimbursement which
rightfully belongs to a builder in good faith. Otherwise, such
a situation would allow the lessee to easily "improve" the
lessor out of its property. We reiterate the doctrine that a
lessee is neither a builder in good faith nor in bad faith 12 that
would call for the application of Articles 448 and 546 of the
Civil Code. His rights are governed by Article 1678 of the Civil
Code, which reads:
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of
the property leased, the lessor upon the termination of the
lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer
damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
10

Under Article 1678, the lessor has the option of paying one-
half of the value of the improvements which the lessee
made in good faith, which are suitable for the use for which
the lease is intended, and which have not altered the form
and substance of the land. On the other hand, the lessee
may remove the improvements should the lessor refuse to
reimburse.
4. G.R. No. 172384 September 12, 2007
ERMINDA F. FLORENTINO, Petitioner, vs.
SUPERVALUE, INC., Respondent.
FACTS: Petitioner is doing business under the business name
"Empanada Royale," a sole proprietorship engaged in the
retail of empanada with outlets in different malls and
business establishments within Metro Manila.
Respondent, on the other hand, is a domestic corporation
engaged in the business of leasing stalls and commercial
store spaces located inside SM Malls found all throughout
the country.
On 8 March 1999, petitioner and respondent executed three
Contracts of Lease containing similar terms and conditions
over the cart-type stalls at SM North Edsa and SM Southmall
and a store space at SM Megamall.
Before the expiration of said Contracts of Lease, or on 4
February 2000, petitioner received two letters from the
respondent, both dated 14 January 2000, transmitted
through facsimile transmissions.
In the first letter, petitioner was charged with violating
Section 8 of the Contracts of Lease by not opening on 16
December 1999 and 26 December 1999.
Respondent also charged petitioner with selling a new
variety of empanada called "mini-embutido" and of
increasing the price of her merchandise from 20.00 to
22.00, without the prior approval of the respondent.
Respondent observed that petitioner was frequently closing
earlier than the usual mall hours, either because of non-
delivery or delay in the delivery of stocks to her outlets,
again in violation of the terms of the contract.
In the second letter, respondent informed the petitioner
that it will no longer renew the Contracts of Lease for the
three outlets.
Respondent took possession of the store space in SM
Megamall and confiscated the equipment and personal
belongings of the petitioner found therein after the
expiration of the lease contract.14
In a letter dated 8 May 2000, petitioner demanded that the
respondent release the equipment and personal belongings
it seized from the SM Megamall store space and return the
security deposits, in the sum of 192,000.00, turned over by
Property Digests (Articles 440 461)
the petitioner upon signing of the Contracts of Lease. On 15
June 2000, petitioner sent respondent another letter
reiterating her previous demands, but the latter failed or
refused to comply therewith.
On 17 August 2000, an action for Specific Performance, Sum
of Money and Damages was filed by the petitioner against
the respondent before the RTC of Makati, Branch 57.
In her Complaint docketed as Civil Case No. 00-1015,
petitioner alleged that the respondent made verbal
representations that the Contracts of Lease will be renewed
from time to time and, through the said representations, the
petitioner was induced to introduce improvements upon the
store space at SM Megamall in the sum of 200,000.00, only
to find out a year later that the respondent will no longer
renew her lease contracts for all three outlets.
RTC
The RTC rendered a Judgment22 in favor of the petitioner
and found that the physical takeover by the respondent of
the leased premises and the seizure of petitioners
equipment and personal belongings without prior notice
were illegal.
CA
Court of Appeals modified the RTC Judgment and found that
the respondent was justified in forfeiting the security
deposits and was not liable to reimburse the petitioner for
the value of the improvements introduced in the leased
premises and to pay for attorneys fees. In modifying the
findings of the lower court, the appellate court declared that
in view of the breaches of contract committed by the
petitioner, the respondent is justified in forfeiting the
security deposits.
ISSUE: Whether or not the respondent is liable to reimburse
the petitioner for the sum of the improvements she
introduced in the leased premises.
RULING: No. In the Contract of Lease mandates that before
the petitioner can introduce any improvement on the leased
premises, she should first obtain respondents consent. In
the case at bar, it was not shown that petitioner previously
secured the consent of the respondent before she made the
improvements on the leased space in SM Megamall. It was
not even alleged by the petitioner that she obtained such
consent or she at least attempted to secure the same. On
the other hand, the petitioner asserted that respondent
allegedly misrepresented to her that it would renew the
terms of the contracts from time to time after their
expirations, and that the petitioner was so induced thereby
that she expended the sum of 200,000.00 for the
improvement of the store space leased.
In ruling that the respondent is liable to reimburse petitioner
one half of the amount of improvements made on the leased
store space should it choose to appropriate the same, the
11

RTC relied on the provision of Article 1678 of the Civil Code
which provides:
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of
the property leased, the lessor upon the termination of the
lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer
damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
While it is true that under the above-quoted provision of the
Civil Code, the lessor is under the obligation to pay the
lessee one-half of the value of the improvements made
should the lessor choose to appropriate the improvements,
Article 1678 however should be read together with Article
448 and Article 546 of the same statute, which provide:
Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and
548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
xxxx
Art. 546. Necessary expenses shall be refunded to every
possessor; but only possessor in good faith may retain the
thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who
has defeated him in the possession having the option of
refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by
reason thereof.
Thus, to be entitled to reimbursement for improvements
introduced on the property, the petitioner must be
considered a builder in good faith. Further, Articles 448 and
546 of the Civil Code, which allow full reimbursement of
useful improvements and retention of the premises until
reimbursement is made, apply only to a possessor in good
faith, i.e., one who builds on land with the belief that he is
the owner thereof. A builder in good faith is one who is
unaware of any flaw in his title to the land at the time he
builds on it.35 In this case, the petitioner cannot claim that
she was not aware of any flaw in her title or was under the
belief that she is the owner of the subject premises for it is a
settled fact that she is merely a lessee thereof.
Property Digests (Articles 440 461)
5. G.R. No. L-25462 February 21, 1980
MARIANO FLOREZA, petitioner, vs. MARIA D. de
EVANGELISTA and SERGIO EVANGELISTA, respondents.
FACTS: Plaintiffs Maria de Evangelista and son Sergio
Evangelista are the owners of a residential lot located at
Tanay, Rizal, with an area of 204.08 sq. ms. assessed at
P410.00.
The EVANGELISTAS borrowed from FLOREZA P100.00. With
the consent of the EVANGELISTAS, FLOREZA occupied the
residential lot in Rizal and built thereon a house of light
materials (barong- barong) without any agreement as to
payment for the use of said lot.
The EVANGELISTAS again borrowed from FLOREZA certain
amounts on different dates, or a total of P740.00 including
the first loan.
In 1949, FLOREZA demolished the barong-barong and in its
place constructed one of strong materials assessed at
P1,410.00. FLOREZA paid no rental as before.
In August 1949, the EVANGELISTAS, for and in consideration
of P1,000.00 (representing the total outstanding loan of
P740.00 plus P260.00 in cash), sold their residential lot to
FLOREZA, with a right to repurchase within a period of 6
years from date as evidenced by a notarial document. 7
months before the expiry of the repurchase period, the
EVANGELISTAS paid in full the repurchase price of P1,000.00.
The EVANGELISTAS, through their counsel, wrote FLOREZA a
letter asking him to vacate the premises, and that they had
already fully paid the consideration for the repurchase of the
lot. FLOREZA refused to vacate unless he was first
reimbursed the value of his house. Hence, the filing of this
Complaint.
The EVANGELISTAS prayed that: 1) they be declared the
owners of the house of strong materials without payment of
indemnity; or, in the alternative to order FLOREZA to remove
said house; 2) that FLOREZA pay them the sum of P10.00 per
month as the reasonable value for the use and occupation of
the same from the date the repurchase price was paid until
FLOREZA removes the house and delivers the lot to them;
and 3) to declare the transaction as one of mortgage and not
of pacto de retro.
FLOREZA admitted the repurchase but controverted by
stating that he would execute a deed of repurchase and
leave the premises upon payment to him of the reasonable
value of the house worth P7,000.00.
The CFI held that the EVANGELISTAS have the right to elect,
as owners of the land, to purchase the house built on the
12

said lot in question by the defendant or to sell their said land
to the defendant.
The CA concluded that Article 448 of the Civil Code was
inapplicable. FLOREZA was not entitled to reimbursement
for his house but that he could remove the same at his
expense.
ISSUE: Whether or not Floreza is entitled to reimbursement
of the cost of his house.
HELD: No. Petitioner's right of retention of subject property
until he is reimbursed for the value of his house is linked
with the question of rentals. If petitioner has the right to
indemnity, he has the right of retention and no rentals need
be paid. Conversely, if no right of retention exists, damages
in the form of rentals for the continued use and occupation
of the property should be allowed.
We uphold the Court of Appeals in its conclusion that Article
448 of the Civil Code is inapplicable. The provision applies
only when the builder, planter, or sower believes he had the
right so to build, plant or sow because he thinks he owns the
land or believes himself to have a claim of title. In this case,
petitioner makes no pretensions of ownership whatsoever.
Petitioner concedes that he was a builder in bad faith but
maintains that' the EVANGELISTAS should also be held in bad
faith, so that both of them being in bad faith, Article 453 of
the Civil Code should apply. By the same token, however,
that Article 448 of the same Code is not applicable, neither is
Article 453 under the ambiance of this case.
Would petitioner, as vendee a retro, then be entitled to the
rights granted in Article 1616 of the Civil Code?
Art. 1616. The vendor cannot avail himself of the
right of repurchase without returning to the vendee
the price of the sale, and in addition:
(1) The expenses of the contract, and any other
legitimate payments made by reason of the sale;
(2) The necessary and useful expenses made on the
thing sold.
The question again calls for a negative answer. It should be
noted that petitioner did not construct his house as a
vendee a retro. The house had already been constructed as
far back as 1949 (1945 for the house of light materials) even
before the pacto de retro sale in 1949. The house was
already there at the tolerance of the EVANGELISTAS in
consideration of the several loans extended to them. Since
petitioner cannot be classified as a builder in good faith
under Article 448 of the Civil Code, nor as a vendee a retro,
who made useful improvements during the lifetime of
the pacto de retro, petitioner has no right to
reimbursement of the value of the house, much less to
retention of the premises until he is reimbursed.
Property Digests (Articles 440 461)
The rights of petitioner are more akin to those of a
usufructuary who, under Article 579 of the Civil, may make
on the property useful improvements but with no right to be
indemnified therefor. He may, however, remove such
improvements should it be possible to do so without
damage to the property: For if the improvements made by
the usufructuary were subject to indemnity, we would have
a dangerous and unjust situation in which the usufructuary
could dispose of the owner's funds by compelling him to pay
for improvements which perhaps he would not have made.
As to the issue of rentals, it is clear that from the date that
the redemption price had been paid by the EVANGELISTAS,
petitioner's right to the use of the residential lot without
charge had ceased. Having retained the property although a
redemption had been made, he should be held liable for
damages in the form of rentals for the continued use of the
subject residential lot at the rate of P10.00 monthly from
January 3, 1955, and not merely from the date of demand on
May 4, 1956, as held by the Court of Appeals, until the house
was removed and the property vacated by petitioner or his
heirs.
6. G.R. No. 153625 July 31, 2006
Heirs of MARCELINO CABAL, represented by VICTORIA
CABAL, petitioner, vs. Spouses LORENZO CABAL and ROSITA
CABAL, respondents.
FACTS: Marcelo Cabal (Marcelo) was the owner of a 4,234-
square meter parcel of land situated at Barrio Palanginan,
Iba, Zambales, described as Lot G.
In August 1954, Marcelo died and was survived by his wife
Higinia Villanueva (Higinia) and his children: Marcelino,
Daniel, Cecilio, Natividad, Juan, Margarita, Lorenzo, Lauro
and Anacleto.
Sometime in 1949, five years before he died, Marcelo
allowed his son, Marcelino, to build his house on a portion of
Lot G (now the southernmost portion of Lot 1-E) and resided
thereon. Marcelino's son also built his house on the disputed
property.
In August 1964, Marcelo's heirs extra-judicially settled
among themselves Lot G into undivided equal.
In September 1973, Daniel sold 380 square meters of his
423.40-square meter undivided share to spouses Oscar
Merete and Clarita Ebue.
In September 1976, the heirs subdivided Lot G into Lot G-1 in
favor of Marcelino and Lot G-2 in favor of Higinia, Daniel,
Natividad, Juan, Cecilio, Margarita, Lorenzo, Lauro and
Anacleto.
Marcelino mortgaged his share to the Rural Bank of San
Antonio, Inc. The mortgage on the property was
subsequently released.
13

In the interim, Lot G-2 was further subdivided and the
remaining portion, known as Lot 1 of the subdivision plan
with Higinia, Margarita, Natividad, Lorenzo, Daniel, Oscar
Merete, Cecilio, Carmelita C. Pagar, and Anacleto as co-
owners.
In August, 1978, the co-owners of Lot 1 executed a Deed of
Agreement of Partition with Sale where the lot was
subdivided among the co-owners with Higinia, Margarita,
Natividad, Lorenzo, Cecilio, Carmelita C. Pagar and
Anacleto. In the same deed, Lorenzo bought the shares of
Higinia, Margarita, Daniel and Natividad. Thus, Lorenzo's
share in the co-ownership amounted to 1,737 square
meters. Likewise, in the same deed, Cecilio sold his share to
a certain Marcela B. Francia.
In January, 1982, a land survey was conducted on Lot 1 by
Geodetic Engineers. Thus, a subdivision plan was executed
which was approved by the Director of the Bureau of Lands.
The co-owners of Lot 1 then executed a Subdivision
Agreement designating their shares based on the approved
subdivision plan. Subsequently, a TCT covering Lot 1-E was
issued in the name of Lorenzo.
The subdivision plan revealed that Marcelino and his son
occupied and built their houses on a 423-square meter area
located on the southernmost portion of Lot 1-E and not the
adjacent lot designated as Lot G-1. Spouses Cabal
(respondents) confronted Marcelino on this matter which
resulted to an agreement to a re-survey and swapping of lots
for the purpose of reconstruction of land titles. However, the
agreement did not materialize.
Hence Spouses Cabal filed a complaint for Recovery of
Possession with Damages against Marcelino before the MTC.
They alleged that Marcelino introduced improvements in
bad faith on their land with knowledge that the adjacent lot
is titled in his name.
Marcelino contended that respondents have no cause of
action against him because he has been in possession in
good faith since 1949 with the respondents' knowledge and
acquiescence. He further avers that acquisitive prescription
has set in.
MTC rendered its Decision in favor of Marcelino stating that
prescription or the length of time by which Marcelino has
held or possessed the property has barred the respondents
from filing a claim.
RTC rendered its Decision setting aside the Decision of the
MTC and held that Marcelino's possession was in the
concept of a co-owner and therefore prescription does not
run in his favor; that his possession, which was tolerated by
his co-owners, does not ripen into ownership.
Property Digests (Articles 440 461)
CA rendered its Decision affirming in toto the Decision of the
RTC.
ISSUE: Whether or not Marcelino is a builder in good faith.
HELD: Yes. The Court rules in favor of the petitioners. It is
undisputed that Marcelino built his house on the disputed
property in 1949 with the consent of his father. Marcelino
has been in possession of the disputed lot since then with
the knowledge of his co-heirs, such that even before his
father died in 1954, when the co-ownership was created, his
inheritance or share in the co-ownership was already
particularly designated or physically segregated.
Thus, even before Lot G was subdivided in 1976, Marcelino
already occupied the disputed portion and even then co-
ownership did not apply over the disputed lot. Elementary is
the rule that there is no co-ownership where the portion
owned is concretely determined and identifiable, though not
technically described, or that said portion is still embraced in
one and the same certificate of title does make said portion
less determinable or identifiable, or distinguishable, one
from the other, nor that dominion over each portion less
exclusive, in their respective owners.
Thus, since Marcelino built a house and has been occupying
the disputed portion since 1949, with the consent of his
father and knowledge of the co-heirs, it would have been
just and equitable to have segregated said portion in his
favor and not one adjacent to it. Undoubtedly, the
subdivision survey in 1976 spawned the dilemma in the
present case. It designated Lot G-1 as Marcelino's share in
the inheritance notwithstanding his possession since 1949 of
a definite portion of Lot G, now the southernmost portion of
Lot 1-E.
Marcelino raised the defense of acquisitive prescription, in
addition to possession in good faith, in his Answer to the
Complaint in the MTC. Prescription, in general, is a mode of
acquiring or losing ownership and other real rights through
the lapse of time in the manner and under conditions laid
down by law, namely, that the possession should be in the
concept of an owner, public, peaceful, uninterrupted and
adverse. Acquisitive prescription is either ordinary or
extraordinary. Ordinary acquisitive prescription requires
possession in good faith and with just title for ten years. In
extraordinary prescription ownership and other real rights
over immovable property are acquired through
uninterrupted adverse possession thereof for thirty years,
without need of title or of good faith.
In the present case, the evidence presented during the trial
proceedings in the MTC were sorely insufficient to prove
that acquisitive prescription has set in with regards to the
disputed lot. The tax declaration and receipts presented in
evidence factually established only that Marcelino had been
religiously paying realty taxes on Lot G-1. Tax declarations
and receipts can only be the basis of a claim of ownership
14

through prescription when coupled with proof of actual
possession. Evidently, Marcelino declared and paid realty
taxes on property which he did not actually possess as he
took possession of a lot eventually identified as the
southernmost portion of Lot 1-E of subdivision plan.
Furthermore, the Court notes that Marcelino no longer
invoked prescription in his pleadings before the RTC and
CA; neither did herein petitioners raise prescription in their
petition and memorandum before this Court. They only
extensively discussed the defense of possession in good
faith. They are thus deemed to have abandoned the defense
of prescription.
The Court shall now delve on the applicability of the
principle of possession in good faith.
The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and
absence of intention to overreach another. Applied to
possession, one is considered in good faith if he is not aware
that there exists in his title or mode of acquisition any flaw
which invalidates it.
In the present case, Marcelino's possession of the disputed
lot was based on a mistaken belief that Lot G-1 is the same
lot on which he has built his house with the consent of his
father. There is no evidence, other than bare allegation, that
Marcelino was aware that he intruded on respondents'
property when he continued to occupy and possess the
disputed lot after partition was effected in 1976.
Moreover, the fact that in 1977 Marcelino mortgaged Lot G-
1 is not an indication of bad faith since there is no concrete
evidence that he was aware at that time that the property
covered by the title and the one he was occupying were not
the same. There is also no evidence that he introduced
improvements on Lot G-1. In fact, the agreement on March
1, 1989 to a resurvey and swapping of lots for the purpose of
reconstructing the land titles is substantial proof of
Marcelino's good faith, sincerity of purpose and lack of
intention to hold on to two lots.
Marcelino is deemed a builder in good faith at least until the
time he was informed by respondents of his encroachment
on their property.
When a person builds in good faith on the land of another,
the applicable provision is Article 448, which reads:
Article 448. The owner of the land on which
anything has been built, sown or planted in
good faith, shall have the right to appropriate
as his own the works, sowing or planting, after
payment of the indemnity provided for in
Articles 54666 and 548,67 or to oblige the one
who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be
Property Digests (Articles 440 461)
obliged to buy the land if its value is
considerably more than that of the building or
trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose
to appropriate the building or trees after proper
indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement,
the court shall fix the terms thereof.
Thus, the owner of the land on which anything has been
built, sown or planted in good faith shall have the right to
appropriate as his own the building, planting or sowing, after
payment to the builder, planter or sower of the necessary
and useful expenses, and in the proper case, expenses for
pure luxury or mere pleasure. The owner of the land may
also oblige the builder, planter or sower to purchase and pay
the price of the land. If the owner chooses to sell his land,
the builder, planter or sower must purchase the land,
otherwise the owner may remove the improvements
thereon. The builder, planter or sower, however, is not
obliged to purchase the land if its value is considerably more
than the building, planting or sowing. In such case, the
builder, planter or sower must pay rent to the owner of the
land. If the parties cannot come to terms over the conditions
of the lease, the court must fix the terms thereof. The right
to choose between appropriating the improvement or selling
the land on which the improvement stands to the builder,
planter or sower, is given to the owner of the land.
In accordance with Depra v. Dumlao, this case must be
remanded to the trial court to determine matters necessary
for the proper application of Article 448 in relation to
Articles 546 and 548. Such matters include the option that
respondents would take and the amount of indemnity that
they would pay, should they decide to appropriate the
improvements on the lots.
7. G.R. No. 108894 February 10, 1997
TECNOGAS PHILIPPINES MANUFACTURING
CORPORATION, petitioner, vs. COURT OF APPEALS
(FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO
UY, respondents.
FACTS: Tecnogas is the registered owner of a parcel of land
situated in Barrio San Dionisio, Paraaque known as Lot
4331-A (should be 4531-A) of Lot 4531. Said land was
purchased by Tecnogas from Pariz Industries, Inc. in 1970,
together with all the buildings and improvements including
the wall existing thereon.
On the other hand, Uy is the registered owner of Lot No.
4531-B of Lot 4531. Said land which adjoins Tecnogass land
was purchased by Uy from a certain Enrile Antonio also in
1970. In 1971, Uy purchased another lot also adjoining
Tecnogass land from a certain Miguel Rodriguez. Portions of
the buildings and wall bought by Tecnogas together with the
land from Pariz Industries are occupying a portion of Uys
adjoining land.
15

Upon learning of the encroachment or occupation by its
buildings and wall of a portion of Uy's land, Tecnogas offered
to buy from Uy that particular portion of his land occupied
by portions of its buildings and wall with an area of 770
square meters, more or less, but Uy refused the offer.
In 1973, the parties entered into a private agreement before
a certain Col. Rosales in Malacaang, wherein Tecnogas
agreed to demolish the wall at the back portion of its land
thus giving to defendant possession of a portion of his land
previously enclosed by Tecnogas's wall.
Uy later filed a complaint before the office of Municipal
Engineer of Paraaque, Metro Manila as well as before the
Office of the Provincial Fiscal of Rizal against Tecnogas in
connection with the encroachment or occupation by
Tecnogas's buildings and walls of a portion of its land but
said complaint did not prosper.
Uy dug or caused to be dug a canal along Tecnogas's wall, a
portion of which collapsed and led to the filing by Tecnogas
of the supplemental complaint in the above-entitled case
and a separate criminal complaint for malicious mischief
against defendant and his wife which ultimately resulted
into the conviction in court of Uy's wife for the crime of
malicious mischief. While trial of the case was in progress,
Tecnogas filed in Court a formal proposal for settlement of
the case but said proposal, however, was ignored by Uy.
RTC in favour of Tecnogas. CA reversed the decision of RTC.
ISSUE: Whether or not the petitioner is builder in good faith.
HELD: YES. We disagree with Respondent Courts reliance on
the cases of J.M. Tuason and Co., Inc. vs. Vda de Lumanlan
and J.M. Tuason and Co., Inc vs. Macalindog in ruling that
the petitioner "cannot be considered in good faith" because
as a land owner, it is "presumed to know the metes and
bounds of his own property, especially if the same are
reflected in a properly issued certificate of title. One who
erroneously builds on the adjoining lot should be considered
a builder in bad faith, there being presumptive knowledge of
the Torrens title, the area, and the extent of the
boundaries." There is nothing in those cases which would
suggest that bad faith is imputable to a registered owner of
land when a part of his building encroaches upon a
neighbours land, simply because he is supposedly presumed
to know the boundaries of his land as described in his
certificate of title.
There is no question that when petitioner purchased the
land from Pariz Industries, the buildings and other structures
were already in existence. The record is not clear as to who
actually built those structures, but it may well be assumed
that petitioner's predecessor-in-interest, Pariz Industries, did
so.
Property Digests (Articles 440 461)
Article 527 of the Civil Code presumes good faith, and since
no proof exists to show that the encroachment over a
narrow, needle-shaped portion of private respondent's land
was done in bad faith by the builder of the encroaching
structures, the latter should be presumed to have built them
in good faith. It is presumed that possession continues to be
enjoyed in the same character in which it was acquired, until
the contrary is proved.
The encroachment in the present case was caused by a very
slight deviation of the erected wall (as fence) which was
supposed to run in a straight line from point 9 to point 1 of
petitioner's lot. It was an error which, in the context of the
attendant facts, was consistent with good faith. Good faith
consists in the belief of the builder that the land he is
building on is his and his ignorance of any defect or flaw in
his title. Hence, such good faith, by law, passed on to Pariz's
successor, petitioner in this case. The good faith ceases from
the moment defects in the title are made known to the
possessor, by extraneous evidence or by suit for recovery of
the property by the true owner.
Consequently, the builder, if sued by the aggrieved
landowner for recovery of possession, could have invoked
the provisions of Art.448 of the Civil Code, which reads:
The owner of the land on which anything has been
built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land
if its value is considerably more than that of the
building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the
terms of thelease and in case of disagreement, the
court shall fix theterms thereof.
The obvious benefit to the builder under this article is that,
instead of being out rightly ejected from the land, he can
compel the landowner to make a choice between the two
options: (1) to appropriate the building by paying the
indemnity required by law, or (2) sell the land to the builder.
The landowner cannot refuse to exercise either option and
compel instead the owner of the building to remove it from
the land.
Can the same benefit be invoked by petitioner who is not
the builder of the offending structures but possesses them
as buyer? - YES
In the first place, there is no sufficient showing that
petitioner was aware of the encroachment at the time it
acquired the property from Pariz Industries. Contrary proof
has not overthrown the presumption of good faith under
16

Article 527 of the Civil Code, as already stated, taken
together with the disputable presumptions of the law on
evidence. In fact, private respondent Eduardo Uy himself
was unaware of such intrusion into his property until after
1971 when he hired a surveyor, following his purchase of
another adjoining lot, to survey all his newly acquired lots.
Upon being apprised of the encroachment, petitioner
immediately offered to buy the area occupied by its building
a species of conduct consistent with good faith.
In the second place, upon delivery of the property by Pariz
Industries, as seller, to the petitioner, as buyer, the latter
acquired ownership of the property. Consequently,
petitioner is deemed to have stepped into the shoes of the
seller in regard to all rights of ownership over the immovable
sold, including the right to compel the private respondent to
exercise either of the two options provided under Article 448
of the Civil Code.
What then is the applicable provision in this case which
private respondent may invoke as his remedy: Article 448
or Article 450 of the Civil Code?
In view of the good faith of both petitioner and private
respondent, their rights and obligations are to be governed
by Art. 448.
The private respondent's insistence on the removal of the
encroaching structures as the proper remedy is thus legally
flawed. This is not one of the remedies bestowed upon him
by law. It would be available only if and when he chooses to
compel the petitioner to buy the land at a reasonable price
but the latter fails to pay such price. This has not taken
place.
Hence, his options are limited to: (1) appropriating the
encroaching portion of petitioner's building after payment of
proper indemnity, or (2) obliging the latter to buy the lot
occupied by the structure. He cannot exercise a remedy of
his own liking.
8. G.R. No. 175399 October 27, 2009
OPHELIA L. TUATIS, Petitioner, vs. SPOUSES ELISEO ESCOL
and VISMINDA ESCOL; HONORABLE COURT OF APPEALS,
22nd DIVISION, CAGAYAN DE ORO CITY; REGIONAL TRIAL
COURT, BRANCH 11, SINDANGAN, ZAMBOANGA DEL
NORTE; and THE SHERIFF OF RTC, BRANCH 11, SINDANGAN,
ZAMBOANGA DEL NORTE, Respondents.
FACTS: Visminda Escol as the seller and Ophelia Tuatis as the
buyer entered into a Deed of Sale by Installments, the
subject matter of which is a parcel of land in Sindangan in
consideration of 10k. It provided that upon the failure of the
buyer to pay the remaining balance within the time
stipulated, he shall return the land to the seller, and the
seller shall return all the amounts paid by the buyer.
Property Digests (Articles 440 461)
Tuatis took possession of the land and constructed a
residential building. Tuatis asserted that she paid Visminda
the remaining balance of P3000 in the presence of one Erik
Selda and thereafter requested Visminda to sign the
absolute deed of sale. Visminda refused contending that the
purchase price has not been fully paid.
The RTC dismissed Tuatiss complaint and also ruled that
Tuatis constructed the building in bad faith for she had
knowledge of the fact that Visminda is still the absolute
owner of the land and there was also bad faith on the part of
Visminda since she allowed the construction of the building
without opposition on her part. The rights of the parties
must, therefore, be determined as if they both had acted in
bad faith. Their rights in such cases are governed by Article
448 of the Civil Code.
The Court of Appeals dismissed the appeal by Tuatis which
resulted to the finality of the appealed decision. Visminda
filed a writ of execution. Tuatis then moved that the RTC
issue an order allowing her to buy the subject property and
maintained that she has the right to choose between being
indemnified for the value of her building or buying from
Visminda the parcel of land. During the pendency of the
motion, the writ of execution was enforced. Tuatis filed with
the CA a petition for certiorari, prohibition and mandamus
but the same was denied hence this petition.
ISSUE: Whether or not Tuatis is entitled to exercise the
options granted in Art. 448 of the Civil Code.
RULING: No, Tuatis is not entitled to exercise the options
granted in Article 448 of the Civil Code.
Article 448 provides that the owner of the land on which
anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the
terms thereof.
According to the provision, the landowner can choose
between appropriating the building by paying the proper
indemnity for the same, as provided for in Articles 546 and
548 of the Civil Code; or obliging the builder to pay the price
of the land, unless its value is considerably more than that of
the structures, in which case the builder in good faith shall
pay reasonable rent.
17

Under the first option, Visminda may appropriate for herself
the building on the subject property after indemnifying
Tuatis for the necessary and useful expenses the latter
incurred for said building, as provided in Article 546 of the
Civil Code. Until Visminda appropriately indemnifies Tuatis
for the building constructed by the latter, Tuatis may retain
possession of the building and the subject property.
Under the second option, Visminda may choose not to
appropriate the building and, instead, oblige Tuatis to pay
the present or current fair value of the land. The P10,000.00
price of the subject property, as stated in the Deed of Sale
on Installment executed in November 1989, shall no longer
apply, since Visminda will be obliging Tuatis to pay for the
price of the land in the exercise of Vismindas rights under
Article 448 of the Civil Code, and not under the said Deed.
Tuatis obligation will then be statutory, and not contractual,
arising only when Visminda has chosen her option under
Article 448 of the Civil Code
Still under the second option, if the present or current value
of the land, the subject property herein, turns out to be
considerably more than that of the building built thereon,
Tuatis cannot be obliged to pay for the subject property, but
she must pay Visminda reasonable rent for the same.
Visminda and Tuatis must agree on the terms of the lease;
otherwise, the court will fix the terms.
The Court highlights that the options under Article 448 are
available to Visminda, as the owner of the subject property.
There is no basis for Tuatis demand that, since the value of
the building she constructed is considerably higher than the
subject property, she may choose between buying the
subject property from Visminda and selling the building to
Visminda for P502,073.00. Again, the choice of options is for
Visminda, not Tuatis, to make. And, depending on
Vismindas choice, Tuatis rights as a builder under Article
448 are limited to the following: (a) under the first option, a
right to retain the building and subject property until
Visminda pays proper indemnity; and (b) under the second
option, a right not to be obliged to pay for the price of the
subject property, if it is considerably higher than the value of
the building, in which case, she can only be obliged to pay
reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code
belongs to the owner of the land is in accord with the
principle of accession, i.e., that the accessory follows the
principal and not the other way around. Even as the option
lies with the landowner, the grant to him, nevertheless, is
preclusive. The landowner cannot refuse to exercise either
option and compel instead the owner of the building to
remove it from the land.
The raison detre for this provision has been enunciated
thus: Where the builder, planter or sower has acted in good
faith, a conflict of rights arises between the owners, and it
becomes necessary to protect the owner of the
Property Digests (Articles 440 461)
improvements without causing injustice to the owner of the
land. In view of the impracticability of creating a state of
forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the
sower the proper rent. He cannot refuse to exercise either
option. It is the owner of the land who is authorized to
exercise the option, because his right is older, and because,
by the principle of accession, he is entitled to the ownership
of the accessory thing.
Vismindas Motion for Issuance of Writ of Execution cannot
be deemed as an expression of her choice to recover
possession of the subject property under the first option,
since the options under Article 448 of the Civil Code and
their respective consequences were also not clearly
presented to her by the 19 April 1999 Decision of the RTC.
She must then be given the opportunity to make a choice
between the options available to her after being duly
informed herein of her rights and obligations under both.
9. RODOLFO V. ROSALES, (represented by his heirs, Rodolfo,
Jr., Romeo Allan, Lillian Rhodora, Roy Victor, Roger Lyle and
Alexander Nicolai, all surnamed Rosales) and LILY
ROSQUETA-ROSALES, Petitioners, - versus -
MIGUEL CASTELLTORT, JUDITH CASTELLTORT, and LINA
LOPEZ-VILLEGAS, assisted by her Attorney-in-Fact, Rene
Villegas, Respondents.
FACTS: Spouses-petitioners Rodolfo V. Rosales and Lily
Rosqueta-Rosales (petitioners) are the registered owners of a
parcel of land with an area of approximately 315 square
meters, covered by Transfer Certificate of Title (TCT) No.
36856 and designated as Lot 17, Block 1 of Subdivision Plan
LRC Psd-55244 situated in Los Baos, Laguna.
On August 16, 1995, petitioners discovered that a house was
being constructed on their lot, without their knowledge and
consent, by respondent Miguel Castelltort (Castelltort).
It turned out that respondents Castelltort and his wife Judith
had purchased a lot, Lot 16 of the same Subdivision Plan,
from respondent Lina Lopez-Villegas (Lina) through her son-
attorney-in-fact Rene Villegas (Villegas) but that after a
survey thereof by geodetic engineer Augusto Rivera, he
pointed to Lot 17 as the Lot 16 the Castelltorts purchased.
Admittedly, the appellants house erroneously encroached
on the property of the appellees due to a mistake in the
placement of stone monuments as indicated in the survey
plan, which error is directly attributable to the fault of the
geodetic engineer who conducted the same. This fact alone
negates bad faith on the part of appellant Miguel.
ISSUE: Whether Castelltort is a builder in good faith.
18

RULING: Yes, The records indicate that at the time
Castelltort began constructing his house on petitioners lot,
he believed that it was the Lot 16 he bought and delivered to
him by Villegas.
As correctly found by the CA, both parties having acted in
good faith at least until August 21, 1995, the applicable
provision in this case is Article 448 of the Civil Code which
reads:
Art. 448. The owner of the land on which anything
has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige
the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged
to buy the land if its value is considerably more
than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or
trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Under the foregoing provision, the landowner can choose
between appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of the
land, unless its value is considerably more than that of the
structures, in which case the builder in good faith shall pay
reasonable rent.[34] If the parties cannot come to terms
over the conditions of the lease, the court must fix the
terms thereof.
The choice belongs to the owner of the land, a rule that
accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way
around. Even as the option lies with the landowner, the
grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel instead
the owner of the building to remove it from the land.
The raison detre for this provision has been enunciated thus:
Where the builder, planter or sower has acted in
good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the
owner of the improvements without causing
injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-
ownership, the law has provided a just solution by
giving the owner of the land the option to acquire
the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay
for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the
owner of the land who is authorized to exercise the
option, because his right is older, and because, by
Property Digests (Articles 440 461)
the principle of accession, he is entitled to the
ownership of the accessory thing.
10. *Double checked this case. Mao jud ni siya bes*
G.R. No. 149984 November 28, 2008
SPOUSES ROLANDO M. ZOSA and LUISA Y. ZOSA,
petitioners, vs. HON. SANTIAGO ESTRELLA, in his capacity as
Presiding Judge, Regional Trial Court of Pasig City, Branch
67, CHINATRUST (PHILS.) COMMERCIAL BANK
CORPORATION, NOTARY PUBLIC JAIME P. PORTUGAL, THE
REGISTER OF DEEDS FOR PASIG CITY, and CHAILEASE
FINANCE CORPORATION,respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 154991 November 28, 2008
SPOUSES ROLANDO M. ZOSA and LUISA Y.
ZOSA,petitioners, vs. COURT OF APPEALS, HON. SANTIAGO
ESTRELLA, in his capacity as Presiding Judge, Regional Trial
Court of Pasig City, Branch 67, CHINATRUST (PHILS.)
COMMERCIAL BANK CORPORATION, NOTARY PUBLIC
JAIME P. PORTUGAL FOR PASIG CITY, and CHAILEASE
FINANCE CORPORATION, respondents.
FACTS: The controversy between the parties started in
August 1999 when respondent Chinatrust demanded from
the petitioners Spouses Zosa the payment of their
outstanding loan totalling P89,426,732.29, and, on account
of the latters failure to pay, extra-judicially foreclosed the
mortgaged real property and its improvements. To keep the
respondent notary public from carrying out the public
auction sale of the subject property, petitioners instituted a
civil case for injunction, specific performance, and damages,
with prayer for the issuance of an injunctive relief, before
the (RTC of Pasig City.
The RTC issued a TRO preventing the respondents from
selling the property. It later issued a writ of preliminary
injunction.
The RTC, on motion of the respondent, dismissed the
complaint.
Aggrieved, petitioners filed a Notice of Appeal and also filed
with the CA, a petition for certiorari, prohibition and
mandamus assailing the Orders of the trial court.
In the meantime, respondent Chailease Finance Corporation,
the highest bidder in the auction sale, registered in its name
the subject property.
CA dismissed petitioners appeal for forum shopping and for
the absence in the appellants brief of page references to the
record. The appellate court further denied petitioners
motion for reconsideration.
ISSUE: Whether or not the trial courts dismissal order for
non-suit constitutes forum shopping.
19

HELD: The petitions are denied. The present controversy is
on all fours with Young v. Sy, in which we ruled that the
successive filing of a notice of appeal and a petition
for certiorari both to assail the trial courts dismissal order
for non-suit constitutes forum shopping. Thus:
Forum shopping consists of filing multiple suits
involving the same parties for the same cause of
action, either simultaneously or successively, for
the purpose of obtaining a favorable judgment.
There is forum shopping where there exist: (a)
identity of parties, or at least such parties as
represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the
identity of the two preceding particulars is such that
any judgment rendered in the pending case,
regardless of which party is successful would
amount to res judicata.
Ineluctably, the petitioner, by filing an ordinary
appeal and a petition for certiorari with the CA,
engaged in forum shopping. When the petitioner
commenced the appeal, only four months had
elapsed prior to her filing with the CA the Petition
for Certiorari under Rule 65 and which eventually
came up to this Court by way of the instant Petition
(re: Non-Suit). The elements of litis pendentia are
present between the two suits. As the CA, through
its Thirteenth Division, correctly noted, both suits
are founded on exactly the same facts and refer to
the same subject matterthe RTC Orders which
dismissed Civil Case No. SP-5703 (2000) for failure
to prosecute. In both cases, the petitioner is seeking
the reversal of the RTC orders. The parties, the
rights asserted, the issues professed, and the reliefs
prayed for, are all the same. It is evident that the
judgment of one forum may amount to res
judicata in the other.
xxxx
The remedies of appeal and certiorari under Rule 65
are mutually exclusive and not alternative or
cumulative. This is a firm judicial policy. The
petitioner cannot hedge her case by wagering two
or more appeals, and, in the event that the ordinary
appeal lags significantly behind the others, she
cannot post facto validate this circumstance as a
demonstration that the ordinary appeal had not
been speedy or adequate enough, in order to justify
the recourse to Rule 65. This practice, if adopted,
would sanction the filing of multiple suits in
multiple fora, where each one, as the petitioner
couches it, becomes a "precautionary measure" for
the rest, thereby increasing the chances of a
favorable decision. This is the very evil that the
proscription on forum shopping seeks to put right.
Property Digests (Articles 440 461)
In Guaranteed Hotels, Inc. v. Baltao, the Court
stated that the grave evil sought to be avoided by
the rule against forum shopping is the rendition by
two competent tribunals of two separate and
contradictory decisions. Unscrupulous party
litigants, taking advantage of a variety of competent
tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached. To
avoid the resultant confusion, the Court adheres
strictly to the rules against forum shopping, and any
violation of these rules results in the dismissal of
the case.
We also made the same ruling in Candido v. Camacho, when
the respondent therein assailed identical court orders
through both an appeal and a petition for an extraordinary
writ.
Here, petitioners questioned the June 26, 2000 Order, the
August 21, 2000 Clarificatory Order, and the November 23,
2000 Omnibus Order of the RTC via ordinary appeal (CA-G.R.
CV No. 69892) and through a petition for certiorari (CA-G.R.
SP No. 62915) in different divisions of the same court. The
actions were filed with a months interval from each one.
Certainly, petitioners were seeking to obtain the same relief
in two different divisions with the end in view of endorsing
whichever proceeding would yield favorable consequences.
11. REPUBLIC vs HON. NORMELITO BALLOCANAG and
Danilo Reyes
G.R. NO. 163794 28 November 2008
FACTS: Danilo Reyes bought the subject land with 162,500
sq.m. at Brgy Banus, Pimanalayan, Oriental Mindoro from
Regina Castillo. Right after his purchase, Reyes introduced
improvements and planted Mangoes, Mandarin citrus, and
Guyabanos. Also, the title of the land transferred in his
name. Unfortunately, it turned out that the subject land is
part of the Timberland of Oriental Mindoro and therefore,
not subject to any disposition or acquisition under any
existing law and is not transferable.
The Office of the Solicitor General (OSG) in behalf of
petitioner, filed a complaint for Cancellation of Title and/or
Revision that the issued Transfer Certificate of Title (TCT) is
spurious, fictitious, and irregularly issued on account of the
subject title was part of the Timberland of Oriental Mindoro
per Bureau of Forest Department (BFD) Land Classification
Map; that the said land are entirely inside the 140 hectares
Agro-Forestry Farm Lease Agreement No. 175 in favor of
Atty. Augusto D. Marte; that the subject land cannot be
subject of any disposition or acquisition under the law.
The Regional Trial Court (RTC) held that Reyes TCT No. 45238
are null and void and ordered to surrender the owners
duplicate copy of the said title and to vacate the premises.
Reyes then appealed the RTC Decision to the Court of Appeal
(CA), apparently, Motion for Reconsideration was DENIED.
20

ISSUE: Whether or not the Republic should pay Reyes the
value of the Improvements he introduced on the property.
HELD: Yes, Supreme Court resolved to deny Reyes petition
for failure to sufficient show that the CA had committed any
reversible error in the questioned the judge. The SC agree
with the CA that Reyes was of the belief that he was the
owner of the subject land. He titled the land, planted fruit
trees thereon and invested money from 1970. It is no longer
feasible to permit him to remove the trees he planted the
only equitable alternative would be to order the Republic to
pay Reyes.
12. ELVIRA T. ARANGOTE, Petitioner, - versus - SPS.
MARTIN MAGLUNOB and LOURDES S. MAGLUNOB, and
ROMEO SALIDO,Respondents. (2009)
FACTS: Elvira T. Arangote, herein petitioner married to Ray
Mars E. Arangote, is the registered owner of the subject
property, as evidenced by Original Certificate of Title (OCT)
No. CLOA-1748.6[6] Respondents Martin (Martin II) and
Romeo are first cousins and the grandnephews of Esperanza
Maglunob-Dailisan (Esperanza), from whom petitioner
acquired the subject property.
The Petition stems from a Complaint filed by petitioner and
her husband against the respondents for Quieting of Title.
ISSUE: Whether Arangote has legal title to the land
RULING:
1. No. It is clear from the records that the subject property
was not Esperanzas exclusive share, but also that of the
other heirs of her father, Martin I. Esperanza expressly
affixed her thumbmark to the Deed of Extrajudicial
Settlement of July 1981 not only for herself, but also on
behalf of the other heirs of Martin I. Logically, if Esperanza
fully owned the subject property, she would have simply
waived her rights to and interest in the subject property,
without mentioning her share and participation in the
same. By including such words in her Affidavit, Esperanza
was aware of and was limiting her waiver, renunciation, and
quitclaim to her one-third share and participation in the
subject property.
Esperanzas Affidavit is, in fact, a Donation. Esperanzas real
intent in executing the said Affidavit was to donate her share
in the subject property to petitioner and her husband. As no
onerous undertaking is required of petitioner and her
husband under the said Affidavit, the donation is regarded
as a pure donation of an interest in a real property
Three requisites for the validity of a simple donation of a real
property, to wit:
(1) it must be made in a public instrument;
Property Digests (Articles 440 461)
(2) it must be accepted, which acceptance may be made
either in the same Deed of Donation or in a separate public
instrument; and
(3) if the acceptance is made in a separate instrument, the
donor must be notified in an authentic form, and the same
must be noted in both instruments.
The title to immovable property does not pass from the
donor to the donee by virtue of a Deed of Donation until and
unless it has been accepted in a public instrument and the
donor duly notified thereof.
Therefore, the Affidavit executed by Esperanza in favor of
petitioner and her husband is null and void.
13. Angeles v. Pascual 658 SCRA 23 G.R. No. 157150
Facts: Under appeal is the decision promulgated on January
31, involved a dispute about the true location of the
respective lots of the parties, with the respondents (Pascual)
claiming that the petitioner (Angeles) had encroached on
their lot but the latter denying the encroachment.
Neighbors Regidor Pascual and Pedro Angeles were
registered owners of adjacent parcels of land located in
Cabanatuan City. Each of them built a house on his
respective lot, believing all the while that his respective lot
was properly delineated. It was not until Metropolitan Bank
and Trust Company (Metrobank), as the highest bidder in
the foreclosure sale of an adjacent, caused the relocation
survey of foreclosed lot that the geodetic engineer
discovered that Pascuals house had encroached on said
foreclosed lot. As a consequence, Metrobank successfully
ejected Pascual.
In turn, Pascual caused the relocation survey of his own Lot 4
and discovered that Angeles house in turn encroached on
his lot. Of the 318 square meters comprising Lot 4, Angeles
occupied 252 square meters, leaving Pascual with only about
66 square meters.i Pascual demanded rentals for the use of
the encroached area from Angeles, or the removal of
Angeles house. Angeles refused the demand. Accordingly,
Pascual sued Angeles for recovery of possession and
damages in the Regional Trial Court (RTC) in Cabanatuan In
the course of the trial, Pascual presented Clarito Fajardo, the
geodetic engineer who had conducted the relocation survey
and had made the relocation plan of Pascuals lot, Fajardo
testified that Angeles house was erected on said lot.
On the other hand, Angeles presented Juan Fernandez, the
geodetic engineer who had prepared the sketch plan relied
upon by Angeles to support his claim that there had been no
encroachment. However, Fernandez explained that he had
performed only a table work, that is, he did not actually go
to the site but based the sketch plan on the descriptions and
bearings appearing on the TCTs of the lots in question and
recommended the conduct of a relocation survey. The RTC
ruled that the ownership of the lots is not the issue, rather
21

what was disputed between them was the location of their
respective lots; that Pascual proved Angeles encroachment
on his lot by preponderant evidence; and that Pascual was
entitled to relief.
Thus the RTC ordered the Angeles or persons claiming right
through him to cause the removal of his house insofar as the
same occupies the portion of Pascuals lot, of an area of 252
square metersii . Angeles then appealed the case to the CA.
On January 31, 2002, the CA affirmed the RTC, and held that
as between the findings of the geodetic engineer (Fajardo)
who had actually gone to the site and those of the other
(Fernandez) who had based his findings on the TCTs of the
owners of the three lots; those of the former should prevail.
However, the modified the ruling of the RTC stating that
Angels is a builder in good faith as provided for in Article 448
of the Civil Code. Thus the CA ordered Angeles to vacate,
appropriate, or pay rent for the occupied portion of
Pascuals property. Moreover, Angeles may opt to sell his
property instead. Angeles sought for reconsideration but CA
denied the motion. Hence this case of certiorari for certiorari
under rule 45.
ISSUE:
1. Whether or not the CA was correct in agreeing with the
RTC with respect to the testimony of Fajardo over the
testimony of Fernandez.
2. Whether or not the decision of the CA with respect to the
options given was contrary to its finding of good faith
Held: With regards the first issue, the Supreme Court that
the credence given by the RTC to the testimony and
relocation plan of Fajardo was conclusive upon this Court
especially by virtue of the affirmance by the CA of the RTC.
Resultantly, the fact of Angeles encroachment on Pascuals
Lot was proved by preponderant evidenceiv . Thus it is
unassailable that Angeles house straddled the lot of Pascual.
On the second issue, the Supreme Court affirmed the
findings of the RTC and the CA that Angels is a builder in
good faith which can easily be drawn from the fact that
Angeles insisted that he built his house entirely on his own
lot. Good faith consists in the belief of the builder that the
land he is building on is his and in his ignorance of a defect
or flaw in his title. Furthermore, the Court affirmed the
application of the CA of the provisions of Article 448 of the
Civil Code which spells out the rights and obligations of the
owner of the land as well as of the builder. Consequently,
the land being the principal and the building the accessory,
preference is given to Pascual as the owner of the land to
make the choice as between appropriating the building or
obliging Angeles as the builder to pay the value of the land.
Contrary to the insistence of Angeles, therefore, no
inconsistency exists between the finding of good faith in his
favor and the grant of the reliefs set forth in Article 448 of
the Civil Code. The Petition is Dismissed.
14. PLDT vs LEVISTE Case Digest
Property Digests (Articles 440 461)
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v.
LAURO LEVISTE, et al.
477 SCRA 634 (2005), Carpio Morales, J.
Di ko sure kung mao ba ni uyyy :(
Once a notice of lis pendens has been duly registered, any
cancellation or issuance of title over the land involved as
well as any subsequent transaction affecting the same would
have to be subject to the outcome of the suit.
FACTS: El Dorado Plantation sold a parcel of land with an
area of approximately 1,825 hectares in Occidental Mindoro
to Fernando O. Carrascoso, Jr. within a period of three (3)
years. In the meantime, Carrascoso and the Philippine Long
Distance Telephone Company (PLDT), executed an
Agreement to Buy and Sell whereby the former agreed to
sell 1,000 hectares of the property to the latter.
In view of Carrascosos failure to pay the balance of the
purchase price, Lauro Leviste, a stockholder and member of
the Board wants a rescission of the sale. Thus, Jose P.
Leviste, as President, sent a letter to Carrascoso informing
him that, El Dorado was seeking the rescission with damages
before the Court of First Instance (CFI). Lauro and El Dorado
also caused to be annotated a Notice of Lis Pendens.
Carrascoso alleged that he was given an extension to pay the
balance and El Dorado committed a gross misrepresentation
when it warranted that the property was not being
cultivated by any tenant to take it out of the coverage of the
Land Reform Code. Two years after their agreement to Buy
and Sell, Carrascoso and PLDT forged a Deed of Absolute
Sale over the 1,000 hectare portion of the property. PLDT
alleged that it is a purchaser in good faith and for value.
The CFI dismissed the complaint on the ground of
prematurity. The Court of Appeals (CA) reversed the decision
of the CFI granting the rescission of El Dorado. Hence, this
petition for review.
ISSUES: Whether or not the Court of Appeals erred in
holding that PLDT took the right, interest and title to the
farm subject to the notice of lis pendens
HELD: Once a notice of lis pendens has been duly registered,
any cancellation or issuance of title over the land involved as
well as any subsequent transaction affecting the same would
have to be subject to the outcome of the suit. In other
words, a purchaser who buys registered land with full notice
of the fact that it is in litigation between the vendor and a
third party stands in the shoes of his vendor and his title is
subject to the incidents and result of the pending litigation.
Notice of lis pendens has been conceived and, more often
than not, availed of, to protect the real rights of the
registrant while the case involving such rights is pending
resolution or decision. With the notice of lis pendens duly
recorded, and while it remains uncancelled, the registrant
22

could rest secure that he would not lose the property or any
part of it during the litigation.
The filing of a notice of lis pendens in effect (1) keeps the
subject matter of litigation within the power of the court
until the entry of the final judgment so as to prevent the
defeat of the latter by successive alienations; and (2) binds a
purchaser of the land subject of the litigation to the
judgment or decree that will be promulgated thereon
whether such a purchaser is a bona fide purchaser or not;
but (3) does not create a non-existent right or lien.
The doctrine of lis pendens is founded upon reason of public
policy and necessity, the purpose of which is to keep the
subject matter of the litigation within the power of the court
until the judgment or decree shall have been entered;
otherwise by successive alienations pending the litigation, its
judgment or decree shall be rendered abortive and
impossible of execution. The doctrine of lis pendens is based
on considerations of public policy and convenience, which
forbid a litigant to give rights to others, pending the
litigation, so as to affect the proceedings of the court then
progressing to enforce those rights, the rule being necessary
to the administration of justice in order that decisions in
pending suits may be binding and may be given full effect, by
keeping the subject matter in controversy within the power
of the court until final adjudication, that there may be an
end to litigation, and to preserve the property that the
purpose of the pending suit may not be defeated by
successive alienations and transfers of title.
PLDT cannot shield itself from the notice of lis pendens
because all that it had at the time of its inscription was an
Agreement to Buy and Sell with Carrascoso, which in effect is
a mere contract to sell that did not pass to it the ownership
of the property. PLDT's possession at the time the notice of
lis pendens was registered not being a legal possession
based on ownership but a mere possession in fact and the
Agreement to Buy and Sell under which it supposedly took
possession not being registered, it is not protected from an
adverse judgment that may be rendered in the case subject
of the notice of lis pendens.
15. CUA vs. VARGAS
G.R. No. 156536 , October 31, 2006
FACTS: A parcel of residential land with an area of 99 square
meters located in San Juan, Virac, Catanduanes was left
behind by the late Paulina Vargas. On February 4, 1994, a
notarized Extra Judicial Settlement Among Heirs was
executed by and among Paulina Vargas' heirs, namely Ester
Vargas, Visitacion Vargas, Juan Vargas, Zenaida V. Matienzo,
Rosario V. Forteza, Andres Vargas, Gloria Vargas, Antonina
Vargas and Florentino Vargas, partitioning and adjudicating
unto themselves the lot in question, each one of them
getting a share of 11 square meters.
Property Digests (Articles 440 461)
Florentino, Andres, Antonina and Gloria, however, did not
sign the document. Only Ester, Visitacion, Juan, Zenaida and
Rosario signed it. The Extra Judicial Settlement Among Heirs
was published in the Catanduanes Tribune for three
consecutive weeks. On November 15, 1994, an Extra Judicial
Settlement. Among Heirs with Sale was again executed by
and among the same heirs over the same property and also
with the same sharings. Once more, only Ester, Visitacion,
Juan, Zenaida and Rosario signed the document and their
respective shares totaling 55 square meters were sold to
Joseph Cua, petitioner herein. According to Gloria Vargas,
the widow of Santiago Vargas and one of respondents
herein, she came to know of the Extra Judicial Settlement
Among Heirs with Sale dated November 16, 1994 only when
the original house built on the lot was being demolished
sometime in May 1995. She likewise claimed she was
unaware that an earlier Extra Judicial Settlement Among
Heirs dated February 4, 1994 involving the same property
had been published in the Catanduanes Tribune.
After knowing of the sale of the 55 square meters to
petitioner, Gloria Vargas tried to redeem the property and
when the offer to redeem was refused and after having
failed to reach an amicable settlement at the barangay level,
Gloria Vargas filed a case for annulment of Extra Judicial
Settlement and Legal Redemption of the lot with the
Municipal Trial Court (MTC) of Virac, Catanduanes against
petitioner and consigned the amount of P100,000 which is
the amount of the purchase with the Clerk of Court on May
20, 1996. Joining her in the action were her children with
Santiago.
After trial on the merits, the MTC rendered a decision in
favor of petitioner, dismissing the complaint as well as the
complaint-in-intervention for lack of merit, and declaring the
Deed of Extra Judicial Settlement among Heirs with Sale valid
and binding. The MTC upheld the sale to petitioner because
the transaction purportedly occurred after the partition of
the property among the co-owner heirs. The MTC opined
that the other heirs could validly dispose of their respective
shares. Moreover, the MTC found that although there was a
failure to strictly comply with the requirements under Article
1088 of the Civil Code for a written notice of sale to be
served upon respondents by the vendors prior to the
exercise of the former's right of redemption, this deficiency
was cured by respondents' actual knowledge of the sale,
which was more than 30 days before the filing of their
complaint, and their consignation of the purchase price with
the Clerk of Court, so that the latter action came too late.
Finally, the MTC ruled that respondents failed to establish by
competent proof petitioner's bad faith in purchasing the
portion of the property owned by respondents' co-heirs. This
was affirmed by the RTC but on Appeal, the CA reversed the
decision of the RTC declaring that, pursuant to Section 1,
Rule 74 of the Rules of Court, the extrajudicial settlement
made by the other co-heirs is not binding upon respondents
23

considering the latter never participated in it nor did they
ever signify their consent to the same.
ISSUE:
1. Whether or not the extra-judicial settlement is null and
void.
2. Whether or not the respondent co-heirs has the right to
redeem the subject property.
HELD: The procedure outlined in Section 1 of Rule 74 is an ex
parte proceeding. The rule plainly states, however, that
persons who do not participate or had no notice of an
extrajudicial settlement will not be bound thereby. It
contemplates a notice that has been sent out or issued
before any deed of settlement and/or partition is agreed
upon (i.e., a notice calling all interested parties to participate
in the said deed of extrajudicial settlement and partition),
and not after such an agreement has already been executed
as what happened in the instant case with the publication of
the first deed of extrajudicial settlement among heirs. The
publication of the settlement does not constitute
constructive notice to the heirs who had no knowledge or
did not take part in it because the same was notice after the
fact of execution.
The requirement of publication is geared for the protection
of creditors and was never intended to deprive heirs of their
lawful participation in the decedent's estate. In this
connection, the records of the present case confirm that
respondents never signed either of the settlement
documents, having discovered their existence only shortly
before the filing of the present complaint.
Following Rule 74, these extrajudicial settlements do not
bind respondents, and the partition made without their
knowledge and consent is invalid insofar as they are
concerned. This is not to say, though, that respondents' co-
heirs cannot validly sell their hereditary rights to third
persons even before the partition of the estate. The heirs
who actually participated in the execution of the
extrajudicial settlements, which included the sale to
petitioner of their pro indiviso shares in the subject
property, are bound by the same. Nevertheless, respondents
are given the right to redeem these shares pursuant to
Article 1088 of the Civil Code.
The right to redeem was never lost because respondents
were never notified in writing of the actual sale by their co-
heirs. Based on the provision, there is a need for written
notice to start the period of redemption, thus: Should any of
the heirs sell his hereditary rights to a stranger before the
partition, any or all of the co-heirs may be subrogated to the
rights of the purchaser by reimbursing him for the price of
the sale, provided they do so within the period of one month
from the time they were notified in writing of the sale by the
vendor.
Property Digests (Articles 440 461)
It bears emphasis that the period of one month shall be
reckoned from the time that a co-heir is notified in writing
by the vendor of the actual sale. Written notice is
indispensable and mandatory, actual knowledge of the sale
acquired in some other manner by the redemptioner
notwithstanding. It cannot be counted from the time
advance notice is given of an impending or contemplated
sale. The law gives the co-heir thirty days from the time
written notice of the actual sale within which to make up his
or her mind and decide to repurchase or effect the
redemption.
Though the Code does not prescribe any particular form of
written notice nor any distinctive method for written
notification of redemption, the method of notification
remains exclusive, there being no alternative provided by
law. This proceeds from the very purpose of Article 1088,
which is to keep strangers to the family out of a joint
ownership, if, as is often the case, the presence of outsiders
be undesirable and the other heir or heirs be willing and in a
position to repurchase the share sold.
It should be kept in mind that the obligation to serve written
notice devolves upon the vendor co-heirs because the latter
are in the best position to know the other co- owners who,
under the law, must be notified of the sale. This will remove
all uncertainty as to the fact of the sale, its terms and its
perfection and validity, and quiet any doubt that the
alienation is not definitive. As a result, the party notified
need not entertain doubt that the seller may still contest the
alienation. Considering, therefore, that respondents' co-
heirs failed to comply with this requirement, there is no legal
impediment to allowing respondents to redeem the shares
sold to petitioner given the former's obvious willingness and
capacity to do so.
16. Nuguid vs. Court of Appeals, and Guevarra 171 SCRA
213 March 1989
FACTS: The deceased spouses Victorino and Crisanta dela
Rosa (spouses dela Rosa) were registered owners of a parcel
of land in Orani, Bataan, and covered by OCT No. 3778. On
or about May 4, 1931, Victorino dela Rosa (widowed by
then) sold one-half of the said property to Juliana Salazar for
P95.00. This sale between him and Salazar, though
evidenced by a document, was not registered. Nevertheless,
Juliana Salazar constructed a house on the lot she purchased
immediately after the sale. On March 10, 1964, petitioner
spouses Diosdado Nuguid and Marqiueta Venegas (spouses
Nuguid) caused the registration of a document entitled
"Kasulatan ng Partihan at Bilihan" (Kasulatan) dated June 6,
1961. In this document, Marciana dela Rosa, together with
the heirs of Victorino and Crisanta dela Rosa, sold to spouses
Nuguid the entire area of the property for the sum of
P300.00. Subsequently, OCT No. 3778 was cancelled by the
Register of Deeds of Bataan, and TCT No. T-12782 was issued
in the spouses Nuguids names.
24

Private respondents claimed that the presented by spouses
Nuguid was forged. They also allegedly discovered the
forged deed as well as the certificate of title in the name of
the petitioners much later, that is, on February 28, 1978,
when respondents Amorita Guevarra and Teresita Guevarra
thought of having the title of their grandmother Juliana
Salazar, registered. On the other hand, spouse Nuguid assert
that in the latter part of 1960, Nicolas dela Rosa, uncle of
respondent Marciana dela Rosa and grandfather of the other
heirs-signatories, offered to sell the subject land to them.
Apparently, Nicolas dela Rosa claimed that he had already
purchased the shares of the heirs over the subject property
as evidenced by a private document entitled "Kasunduan"
(Kasunduan) dated August 31, 1955, and as a matter of fact,
he had in his possession the original certificate of title
covering the property in the name of the deceased Victorino
and Crisanta dela Rosa.
The CFI of Bataan dismissed the complaint filed by private
respondents, but the Court of Appeals reversed said decision
and ordered the spouses Nuguid to execute a deed of
reconveyance in favor of herein respondents.
ISSUE: Who is the rightful owner of the subject property?
RULING: The Supreme Court reinstated the decision of the
CFI of Bataan. The basis for the Court of Appeals' conclusion
that petitioners were buyers in bad faith is ambiguous
because said court relied on the singular circumstance that
the petitioners are from Orani, Bataan, and should have
personally known that the private respondents were the
persons in actual possession. However, at the time of the
purchase, the spouses Nuguid dealt with Pedro Guevarra
and Pascuala Tolentino, the latter being the actual
occupants. The respondents Guevarras, children of the said
Pedro and Pascuala Guevarra, came into the picture only
after their parents died.
As for the respondent heirs of Victorino dela Rosa, their
being in actual possession of any portion of the property
was, likewise, simply presumed or taken for granted by the
Court of Appeals.
The private respondents cannot also honestly claim that
they became aware of the spouses Nuguids title only in
1978, because ever since the latter bought the property in
1961, the spouse Nuguid have occupied the same openly,
publicly, and continuously in the concept of owners, even
building their house thereon. For seventeen years they were
in peaceful possession, with the respondents Guevarras
occupying less than one-half of the same property.
17. Rasdas vs. Estenor
Facts: The dispute centers on a parcel of land with a situated
in Ilagan, Isabela. Respondent filed a Complaint for Recovery
of Ownership and Possession with Damages against. The
complaint was docketed and tried by the RTC of Ilagan. In
Property Digests (Articles 440 461)
the same complaint, respondent asserted that he was the
owner of the subject property, which was then in the
possession of petitioners. The RTC decided in favor of
petitioners. The CA reversed the judgment of the RTC and
declared respondent as the owner of the subject property.
Thereafter, a Writ of Execution and Writ of Demolition was
issued against petitioners, who were ordered to demolish
their houses, structures, and improvements on the property.
Petitioners alleged that they were entitled to just
compensation relating to the value of the houses they had
built on the property, owing to their purported status as
builders in good faith. They claimed that the CA decision did
not declare them as builders in bad faith, and thus, they
were entitled to be reimbursed of the value of their houses
before these could be demolished. They posited that
without such reimbursement, they could not be ejected
from their houses.
Issue: WON petitioners are in good faith.
Held: NO. The father of the petitioners (and their
predecessor-in-interest) had already known that he did not
own the property, and that his stay therein was merely out
of tolerance. Such conclusion in fact bolstered the eventual
conclusion that respondents were the owners of the land
and that petitioners should vacate the same.
These premises remaining as they are, it is clear that
petitioners are not entitled to the just compensation they
seek through the present complaint. Under Article 448 of the
Civil Code, the builder in bad faith on the land of another
loses what is built without right to indemnity. Petitioners
were in bad faith when they built the structures as they had
known that the subject property did not belong to them.
18. PNB vs. De Jesus
Facts: It would appear that on 10 June 1995, respondent
filed a complaint against petitioner before the Regional Trial
Court of Occidental Mindoro for recovery of ownership and
possession, with damages, over the questioned property. In
his complaint, respondent stated that he had acquired a
parcel of land situated in Mamburao, Occidental Mindoro,
with an area of 1,144 square meters covered by TCT No. T-
17197, and that on 26 March 1993, he had caused a
verification survey of the property and discovered that the
northern portion of the lot was being encroached upon by a
building of petitioner to the extent of 124 square meters.
Despite two letters of demand sent by respondent,
petitioner failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the
lot and the building sometime in 1981 from then Mayor
Bienvenido Ignacio, the encroachment already was in
existence and to remedy the situation, Mayor Ignacio
offered to sell the area in question (which then also
belonged to Ignacio) to petitioner at P100.00 per square
25

meter which offer the latter claimed to have accepted. The
sale, however, did not materialize when, without the
knowledge and consent of petitioner, Mayor Ignacio later
mortgaged the lot to the Development Bank of the
Philippines. He also contends that he is a builder in good
faith.
Issue: Whether or not being a builder in good faith matters
under article 448.
Held: Article 448, of the Civil Code refers to a piece of land
whose ownership is claimed by two or more parties, one of
whom has built some works (or sown or planted something)
and not to a case where the owner of the land is the builder,
sower, or planter who then later loses ownership of the land
by sale or otherwise for, elsewise stated, where the true
owner himself is the builder of works on his own land, the
issue of good faith or bad faith is entirely irrelevant.
19. Parilla vs. Pilar
A tenant cannot be said to be a builder in good faith as he
has no pretension to be owner. At all events, under the Civil
Code, it is the lessor who is given the option, upon
termination of the lease contract, either to appropriate the
useful improvements by paying one-half of their value at that
time, or to allow the lessee to remove the improvements.
Facts: Spouses Samuel and Chinita Parilla and their son, as
dealers of Pilipinas Shell Petroleum Corporation (Pilipinas
Shell), have been in possession of a parcel of land in Bantay,
Ilocos Sur which was leased to them by respondent Dr.
Prospero Pilar.
When the lease contract between Pilipinas Shell and Pilar
expired, and despite demands to vacate, the Parillas
remained in possession of the property on which they built
improvements. The Parillas and the other occupants
remained in the property. Hence, Pilar filed a complaint for
ejectment before the Municipal Trial Court (MTC) of Bantay,
Ilocos Sur. The MTC ordered the Parillas to vacate and to pay
Pilar a reasonable compensation for the use of the property.
It also ordered Pilar to reimburse the Parillas the amount
Two Million Pesos representing the value of the
improvements introduced on the property.
Pilar appealed to the Regional Trial Court of Vigan and the
RTC affirmed the MTCs Decision. However, on Pilars
petition for review, the Court of Appeals set aside the lower
courts decision.
Issue: Whether or not the Parillas are entitled to
reimbursement for the improvements being builders in good
faith
Held: Jurisprudence is replete with cases which categorically
declare that Article 448 covers only cases in which the
builders, sowers or planters believe themselves to be
Property Digests (Articles 440 461)
owners of the land or, at least, have a claim of title thereto,
but not when the interest is merely that of a holder, such as
a mere tenant, agent or usufructuary. A tenant cannot be
said to be a builder in good faith as he has no pretension to
be owner.
The right of the lessor upon the termination of a lease
contract with respect to useful improvements introduced on
the leased property by a lessee is covered by Article 1678.
Clearly, it is Article 1678 of the New Civil Code which applies
to the present case. The Parillas claim for reimbursement of
the alleged entire value of the improvements does not thus
lie under Article 1678. Not even for one-half of such alleged
value, there being no substantial evidence, e.g., receipts or
other documentary evidence detailing costs of construction.
Besides, by the Parillas admission, of the structures they
originally built the billiard hall, restaurant, sari-sari store
and a parking lot, only the bodega-like sari-sari store and
the parking lot now exist.
At all events, under Article 1678, it is the lessor who is given
the option, upon termination of the lease contract, either to
appropriate the useful improvements by paying one-half of
their value at that time, or to allow the lessee to remove the
improvements. This option solely belongs to the lessor as
the law is explicit that [s]hould the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer
damage thereby. It appears that the lessor has opted not to
reimburse.
20. Narvaez vs. Alciso
Facts: Larry A. Ogas (Ogas) owned a parcel of land and a
portion was subject to a 30-year lease agreement4 with Esso
Standard Eastern, Inc. Ogas sold the property to his daughter
Rose O. Alciso (Alciso). In 1979, Alciso entered into a Deed of
Sale with Right to repurchase, selling the property to Jaime
Sansano (Sansano) for P10,000. Alciso later repurchased the
property from Sansano and, on she entered into another
Deed of Absolute Sale, this time selling the property to Celso
S. Bate (Bate) for P50,000. The Deed stated that: The
SELLER warrants that her title to and ownership of the
property herein conveyed are free from all liens and
encumbrances except those as appear on the face of the
title, specifically, that lease over the said property in favor of
ESSO STANDARD EASTERN, INC., the rights over which as a
lessor the SELLER likewise hereby transfers in full to the
buyer. Bate entered into a Deed of Sale of Realty,10 selling
the property to the spouses Narvaez where they built a
commercial building on the property amounting
to P300,000. Alciso demanded that a stipulation be included
in the 14 August 1981 Deed of Sale of Realty allowing her to
repurchase the property from the Spouses Narvaez. Alciso
alleged that she informed the Spouses Narvaez that she
wanted to repurchase the property. The Spouses Narvaez
demanded P300,000, but Alciso was willing to pay
26

only P150,000. Alciso and the Spouses Narvaez failed to
reach an agreement on the repurchase price.
Issue: Whether or not the spouses Narvaez were right in
claiming that Alciso did not communicate her acceptance of
the favor contained in the stipulation pour autrui; thus, she
could not repurchase the property.
Held: The petition is unmeritorious. Article 1311, paragraph
2, of the Civil Code states the rule on stipulations pour
autrui: If a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person.
In Limitless Potentials, Inc. v. Quilala, the Court laid down
the requisites of a stipulation pour autrui: All the requisites
are present in the instant case: (1) there is a stipulation in
favor of Alciso; (2) the stipulation is a part, not the whole, of
the contract; (3) Bate and the Spouses Narvaez clearly and
deliberately conferred a favor to Alciso; (4) the favor is
unconditional and uncompensated; (5) Alciso communicated
her acceptance of the favor before its revocation she
demanded that a stipulation be included in the Deed of Sale
of Realty allowing her to repurchase the property from the
Spouses Narvaez, and she informed the Spouses Narvaez
that she wanted to repurchase the property; and (6) Bate
and the Spouses Narvaez did not represent, and were not
authorized by, Alciso. Alciso had four years from 14 August
1981 to repurchase the property since there was no express
agreement as to the period when the right can be exercised.
Tender of payment of the repurchase price is necessary in
the exercise of the right of redemption. Tender of payment
is the sellers manifestation of his or her desire to
repurchase the property with the offer of immediate
performance. Alcisos intimation to the Spouses Narvaez
that she wanted to repurchase the property was insufficient.
ARTICLE 449
1. Aquino vs Aguilar
Facts: Petitioners spouses are the registered owners of a
house and lot in Guadalupe. Respondents were allowed by
petitioners to reside on the said property while the latter
were residing in the USA. Respondents occupied half of the
third floor of the newly constructed building in lieu of the
demolished one for the next 20 years without payment of
rental. On 2003, petitioners sent a letter to respondents
informing them that an immediate family member needed
to use the premises and demanding the surrender of the
property within 10 days from notice. Respondents failed to
heed this demand which constrained petitioners to file an
ejectment case against the same before the METC. In
defense, respondents claimed that they are co-owners of the
Property Digests (Articles 440 461)
petitioners of the subject property since they had
contributed to the improvement of the same and the
construction of the building, both in terms of money and
management or supervision services. Petitioners purportedly
agreed to let them contribute to the costs of construction in
exchange for the exclusive use of a portion of the building.
The MeTC ruled in favor of petitioners and ruled among
others that respondents were builders in bad faith who were
not entitled to recover their purported expenses for the
construction of the building. Upon appeal, the RTC affirmed
the METC ruling. The CA also affirmed the lower court ruling
upon respondents appeal but ruled that respondents were
entitled for reimbursement, hence, this petition.
Issue: WON respondents were entitled for reimbursement
for the cost of the improvements introduced by them on the
subject property?
Held: No, respondents as builders in bad faith, are not
entitled to reimbursement of useful expenses. . The term
"builder in good faith" as used in reference to Article 448 of
the Civil Code, refers to one who, not being the owner of the
land, builds on that land believing himself to be its owner
and unaware of the land, builds on that land, believing
himself to be its owner and unaware of the defect in his title
or mode of acquisition. The essence of good faith lies in an
honest belief in the validity of one's right, ignorance of a
superior claim, and absence of intention to overreach
another.
In the instant case, the Spouses Aguilar cannot be
considered as builders in good faith on account of their
admission that the subject lot belonged to the Spouses
Aquino when they constructed the building.
Respondents were evidently prohibited by petitioners from
building improvements on the land because the latter had
every intention of selling it.
In view of the foregoing, the court ruled that Article 448
cannot be applied to this case. Hence, that petitioners, as
the owners of the land, have the right to appropriate what
has been built on the property, without any obligation to pay
indemnity therefor; and that respondents have no right to a
refund of any improvement built therein, pursuant to
Articles 449 and 450 of the Civil Code.
2. De Castro Homesite, Inc. vs. Leachon, Jr.
Facts: Petitioner De Castro Homesite, Inc., a duly organized
corporation and the owner of twelve (12) parcels of
residential land in Quezon City, known as the Dupax
Compound, filed a complaint against private respondents for
violation of Pres. Decree No. 772 or the "Anti-Squatting
Law."
Private respondents filed a Motion to Quash the Information
27

on the ground that Pres. Decree No. 772 is unconstitutional.
Said Motion was denied by the MeTC which stated that said
law has not yet been declared unconstitutional by the
proper tribunal. A Motion for Reconsideration was
subsequently denied.
With the denial of the Motion for Reconsideration, the lower
court scheduled the arraignment of the respondents on 29
May 1995. On even date, counsel for the respondents
informed the court that he had yet to receive the Order
denying the Motion for Reconsideration, hence, the court
a quo reset the arraignment on 31 August 1995 in order to
give defendants time to take whatever legal step was
necessary.
On 15 August 1995, private respondents filed a
petition before the Regional Trial Court (RTC)
for Certiorari and Prohibition with Prayer for Preliminary
Injunction and/or Temporary Restraining Order seeking to
annul the orders denying the Motion to Quash and the
Motion for Reconsideration, to enjoin the MeTC from
proceeding with the arraignment of private respondents,
and to have Pres. Decree No. 772 declared unconstitutional.
During the scheduled arraignment on 31 August 1995,
counsel for private respondents requested for
postponement alleging that they had previously filed a
petition for Certiorari with prayer for issuance of a
Temporary Restraining Order before the RTC.
Since no restraining order was issued by the RTC, Branch 97,
the arraignment proceeded on 10 October 1995 where
private respondents all entered a plea of "not guilty" to the
charge of violation of Pres. Decree No. 772.
The controversies arising from this case center on the
question of the constitutionality and legality of Pres. Decree
No. 772 vis--vis the adoption of the 1987 Constitution and
the enactment of Rep. Act No. 7279.
Issue: What are professional Squatters?
Held: Article I, Section 3 of Rep. Act No. 7279 defines
"professional squatters" as individuals or groups who occupy
lands without the express consent of the landowner and
who have sufficient income for legitimate housing. The term
shall also apply to persons who have previously been
awarded home lot or housing units by the Government but
who sold, leased, transferred the same to settle illegally in
the same place or in another urban area, and non-bona fide
occupants and intruders of lands reserved for socialized
housing.
From the facts, it is clear that the controversies arising from
the two consolidated cases center on the question of the
constitutionality and legality of Pres. Decree No. 772 vis--vis
the adoption of the 1987 Constitution and the enactment of
Rep. Act No. 7279.
Property Digests (Articles 440 461)
The solution to the above dilemma, however, has already
been supplied by Congress with the enactment of the "Anti-
Squatting Law Repeal Act of 1997" (Republic Act No. 8368)
which took effect on 27 December 1997. Rep. Act No. 8368
was enacted solely for the purpose of expressly
repealing Pres. Decree No. 772. Moreover, Section 3 thereof
specifically provides that "all pending cases under the
provisions of Presidential Decree No. 772 shall be dismissed
upon the effectivity of this Act."
Necessarily, the legal effect of this declaration by a co-equal
branch of government renders superfluous further
disquisition of the cases at hand.
Furthermore, after the repeal of Pres. Decree No. 772, the
governing law with respect to the subject matter of
"squatting" is now the Urban Development and Housing Act
of 1992 (Rep. Act 7279).
3. G.R. No. 169447 February 26, 2007
DORO LAND REALTY AND DEVELOPMENT
CORPORATION, Petitioner,
vs. NILA CLAUNAN, SILVANO1 SALAS, JOBERTO
2
MAGHANO, ALFREDO MOMPAR,3 VICENTE GARCIA,
EDITHA LAPIZ and HEIRS OF ELEUTERIO MAGHANO,
namely: AVELINA, RICARDO, ROMEO, JOBERTO, ROY,
LUCRESIA, SUSAN, JOHNNY, CONCHITA, and BEBENA all
surnamed MAGHANO, Respondents.
DOCTRINE:
Squatters cannot invoke defense of laches.
A squatter has no right of possession that may be prejudiced
by his eviction. Unless there are intervening rights of third
persons which may be affected or prejudiced by a decision
ordering the return of the lots to the registered owner, the
equitable defense of laches will not apply as against the
latter.
Although a registered owner may lose his right to recover
possession of his registered property by reason of laches,
the equitable defense is unavailing to one who has not
shown any color of title to the property such as a squatter.
FACTS: DOro Land Realty and Development Corporation and
the Regalados are registered owners of three parcels of land
situated in Barrio Mambato (Agora), Lapasan, Cagayan de
Oro City.
The lots were originally owned by Chacon Enterprises Inc.
and were sold (in 1990) to Doro Land and the Regalados.
Thus, a TCT were issued in the name of Doro (Lots 2-A and
2-B) while the Regalados for Lot 2-C. Doro Land later
purchased Lot 2-C from the Regalados.
Thereafter, DOro Land caused a relocation survey to be
conducted and confirmed that there were about 34 houses
sporadically erected on the lots. Apparently, certain
28

individuals surreptitiously entered the properties and
introduced improvements thereon shortly after the opening
of the nearby Agora Public Market.
After demands to vacate went unheeded, DOro Land filed
an action for recovery of possession and damages against
more than 50 individuals who refused to surrender
possession of the lots.
Of the more than 50 defendants, only 7 filed an Answer
within the reglementary period.
Respondents alleged that they entered the lots between the
years 1970 to 1982; that their occupation of the lots has
been continuous, undisturbed, public and adverse and has
therefore ripened into ownership; that whatever rights
petitioner had over the lots were barred by laches; that they
need not pay any rent and must instead be awarded
attorneys fees, exemplary and moral damages as well as
litigation expenses and costs.
In support of their claim, respondents presented a
Certification14 issued on June 11, 1984 by Forest Guards and
approved by District Forester that the lots were alienable
and disposable land of the State.
According to respondents, the lots were marshy, swampy,
surrounded by "piyapi" trees and without improvements
when they occupied the same.
The trial court held that while respondents could not acquire
title to the registered lots in derogation of that of petitioner
through prescription, the latters claim was nonetheless
barred by laches. There was no reason for petitioner and its
predecessor not to have knowledge of respondents
possession of the lots as the same was public and adverse.
As such, the failure of petitioner and its predecessor to
assert its right of ownership over the lots within a
reasonable length of time necessarily barred its claim against
respondents.
The trial court also faulted petitioner for not making the
necessary inquiries when it bought the disputed lots from
Chacon Enterprises, Inc. in 1990. According to the trial court,
petitioner should have investigated the nature of
respondents possession before it purchased the lots from
the original owner. Having failed to do so, petitioner must be
deemed a buyer in bad faith under the principle of caveat
emptor.
Petitioner appealed to the Court of Appeals which affirmed
the trial courts decision in toto.
Petitioner mainly contends that laches could not bar its
claim over the subject lots since respondents had no
colorable title or any valid claim of ownership to it.
Respondents are mere squatters whose possession of the
lots, no matter how long, could not prevail over petitioners
certificate of title. At any rate, respondents length of
Property Digests (Articles 440 461)
possession does not even meet jurisprudential standards
for laches to set in.
ISSUE: Whether or not respondents as squatters can
invoke the defense of laches
RULING: NO
From the facts of the case and upon inquiry, the respondents
entered the lots and built their dwellings thereon without
any colorable title.
Believing that the lots were alienable and disposable
property of the State, they occupied the same in the hope
that they would not be disturbed in their possession. They
knew that they did not own the lots and concluded, on the
basis of a certification issued by the Bureau of Forest
Development, that the lots were government-owned.
Regardless of the nature of the lots ownership, however,
the fact remains that respondents entered the properties
without permission from the owner.
Thus, having no possessory rights whatsoever, no injury
could be caused to respondents if they return the lots to
petitioner.
Unless there are intervening rights of third persons which
may be affected or prejudiced by a decision ordering the
return of the lots to the registered owner, the equitable
defense of laches will not apply as against the latter.
Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been
done earlier. It is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned or declined
to assert it. The defense of laches is an equitable one and
does not concern itself with the character of the defendants
title, but only with whether or not by reason of plaintiffs
long inaction or inexcusable neglect, he should be barred
from asserting his claim at all, because to allow him to do so
would be inequitable and unjust to the defendant.
The elements of laches are: (1) conduct on the part of the
defendant, or one under whom he claims, giving rise to the
situation that led to the complaint and for which the
complaint seeks a remedy; (2) delay in asserting the
complainants rights, having had knowledge or notice of the
defendants conduct and having been afforded an
opportunity to institute a suit; (3) lack of knowledge or
notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4)
injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held barred.
The third and fourth elements of laches are not present in
the instant case. It cannot be said that respondents lacked
notice that petitioner would assert its right over the lots
considering that they knew from the beginning that they
29

have no right to the same. Neither can respondents claim
any injury or prejudice that would result by restoring
possession of the lots to petitioner. Respondents have no
possessory rights over the lots. As mere intruders, they are
bound to an implied promise to surrender possession of
the property to the real owner, regardless of the identity of
the latter.
Having no title or document to overcome petitioners
ownership over the land in question, respondent is therefore
an intruder or squatter whose occupation of the land is
merely being tolerated. A squatter has no possessory rights
over the land intruded upon. As such, her occupancy of the
land is only at the owners sufferance, her acts are merely
tolerated and cannot affect the owners possession. She is
necessarily bound to an implied promise that she will vacate
upon demand.
In the instant case, respondents cannot claim any better
right over the lots than its original registered owner, Chacon
Enterprises Inc. Apart from the assertion that they have
been in open, adverse and notorious possession of the lots
for a long period of time, respondents have not shown any
proof of title that is superior to that of the registered owner.
It should be emphasized that a certificate of title cannot be
defeated by adverse, open and notorious possession by third
persons. The title, once registered, is notice to the whole
world and no one can plead ignorance of the registration.
Thus, while possession by a third person other than the
registered owner could indicate a defect in the title of the
vendor, it does not per se render the latters title defective.
It is only when such possession is of a character that would
confer upon the possessor some superior right against the
registered owner that the latter may be deemed to have a
flawed title. Since respondents "adverse, open and
notorious possession" of the lots cannot defeat the title of
Chacon Enterprises Inc., the former did not acquire any
superior possessory right over the lots. Petitioner thus
acquired a clean title from Chacon Enterprises Inc. and is not
barred from recovering possession of the lots from
respondents.
4. FERMIN MANAPAT, G.R. No. 110478[1] Petitioner, -
versus - COURT OF APPEALS and NATIONAL HOUSING
AUTHORITY, Respondents.
FACTS: The three-decade saga of the parties herein has for
its subject parcels of land forming part of what was originally
known as the Grace Park Subdivision in Caloocan City and
formerly owned by the Roman Catholic Archbishop of Manila
(RCAM) and/or the Philippine Realty Corporation (PRC).
Sometime in the 1960s, RCAM allowed a number of
individuals to occupy the Grace Park property on condition
that they would vacate the premises should the former push
through with the plan to construct a school in the area. The
Property Digests (Articles 440 461)
plan, however, did not materialize, thus, the occupants
offered to purchase the portions they occupied.
Later, as they could not afford RCAMs proposed price, the
occupants, organizing themselves as exclusive members of
the Eulogio Rodriguez, Jr. Tenants Association, Inc.,
petitioned the Government for the acquisition of the said
property, its subdivision into home lots, and the resale of the
subdivided lots to them at a low price.
Acting on the associations petition, the Government, in
1963, through the Land Tenure Administration (LTA), later
succeeded by the Peoples Homesite and Housing
Corporation (PHHC), negotiated for the acquisition of the
property from RCAM/PRC. But because of the high asking
price of RCAM and the budgetary constraints of the
Government, the latters effort to purchase and/or to
expropriate the property was discontinued.
RCAM then decided to effect, on its own, the subdivision of
the property and the sale of the individual subdivided lots to
the public.
Petitioners Manapat and Lim and respondents Loberanes,
Quimque, Vega, Santos, Oracion and Mercado in these
consolidated cases were among those who purchased
individual subdivided lots of Grace Park directly from RCAM
and/or PRC.
A significant turn of events however happened in 1977 when
the late President Ferdinand E. Marcos issued Presidential
Decree (PD) No. 1072, appropriating P1.2M out of the
Presidents Special Operations Funds to cover the additional
amount needed for the expropriation of Grace Park.
The National Housing Authority (NHA), PHHCs successor,
then filed several expropriation proceedings over the already
subdivided lots for the purpose of developing Grace Park
under the Zonal Improvement Program (ZIP) and subdividing
it into small lots for distribution and resale at a low cost to
the residents of the area.
ISSUE: Whether the NHA may validly expropriate the
parcels of land subject of these cases
RULING: The power of eminent domain is an inherent and
indispensable power of the State. Also called the power of
expropriation, it is described as the highest and most exact
idea of property remaining in the government that may be
acquired for some public purpose through a method in the
nature of a compulsory sale to the State. By virtue of its
sovereign character, the exercise of the power prevails over
the non-impairment clause, and is clearly superior to the
final and executory judgment rendered by a court in an
ejectment case.
Being inherent, the power need not be specifically conferred
on the government by the Constitution. Section 9, Article III
of the Constitution, which mandates that private property
30

shall not be taken for a public use without just
compensation, merely imposes a limit on the governments
exercise of the power and provides a measure of protection
to the individuals right to property.[50]
Just like its two companion fundamental powers of the
State,[51] the power of eminent domain is exercised by the
Legislature. However, it may be delegated by Congress to
the President, administrative bodies, local government units,
and even to private enterprises performing public
services.[52]
Albeit the power partakes of a sovereign character, it is by
no means absolute. Its exercise is subject to limitations, one
of which is, precisely, Section 9, Article III of the Constitution.
Over the years and in a plethora of cases, this Court has
recognized the following requisites for the valid exercise of
the power of eminent domain: (1) the property taken must
be private property; (2) there must be genuine necessity to
take the private property; (3) the taking must be for public
use; (4) there must be payment of just compensation; and
(5) the taking must comply with due process of
law.[53] Accordingly, the question that this Court must
resolve is whether these requisites have been adequately
addressed.
It is incontrovertible that the parcels of land subject of
these consolidated petitions are private property. Thus, the
first requisite is satisfied.
With respect to the second, it is well to recall that
in Lagcao v. Judge Labra,[54] we declared that the
foundation of the right to exercise eminent domain is
genuine necessity, and that necessity must be of a public
character. As a rule, the determination of whether there is
genuine necessity for the exercise is a justiciable question.
However, when the power is exercised by the Legislature,
the question of necessity is essentially a political question
In the instant cases, the authority to expropriate came
from Presidential Decree No. 1072, issued by then
President Ferdinand E. Marcos in 1977. At that time, and as
explicitly recognized under the 1973 Constitution, President
Marcos had legislative powers. Perforce, the expropriation
of the subject properties identified with specificity in the
P.D. --- was directed by legislation. The issue of necessity
then assumed the nature of a political question.
As to the third requisite of public use, we examine the
purpose for which the expropriation was undertaken by
NHA.
As set forth in its petition, NHA justifies the taking of the
subject property for the purpose of improving and upgrading
the area by constructing roads and installing facilities
thereon under the Governments zonal improvement
Property Digests (Articles 440 461)
program and subdividing them into much smaller lots for
distribution and sale at a low cost to qualified beneficiaries,
mostly underprivileged long-time occupants of Grace Park.
Around 510 families with approximately 5 members each
will be benefited by the project. The only remaining obstacle
in the completion of this project is the lots subject of these
consolidated petitions as the other lots in Grace Park have
already been expropriated.
The Zonal Improvement Program (ZIP), being implemented
for government by NHA, draws breath from policy mandates
found in the 1987 Constitution.
It is an integral part of the governments socialized housing
program that the Court deemed compliant with the public
use requirement, it being a program clearly devoted to a
public purpose.
The Court is satisfied that "socialized housing" falls within
the confines of "public use". It is, particularly important to
draw attention to paragraph (d) of Pres. Dec. No. 1224 which
should be construed in relation with the preceding three
paragraphs. Provisions on economic opportunities
inextricably linked with low-cost housing, or slum clearance,
relocation and resettlement, or slum improvement
emphasize the public purpose of the project.
It need only be added, at this juncture, that the public use
requisite for the valid exercise of the power of eminent
domain is a flexible and evolving concept influenced by
changing conditions. At present, it may not be amiss to
state that whatever is beneficially employed for the
general welfare satisfies the requirement of public use.
Given this discussion, it is clear that public use, as a requisite
for the exercise of eminent domain in the instant cases, has
been adequately fulfilled.
To satisfy the fourth requisite, we affirm the appellate
courts disposition that the subject cases be remanded to
the trial court for the determination of the amount of just
compensation. Under case law, the said determination is a
judicial prerogative.
As to the observance of the fifth requisite, the due process
clause, in the expropriation proceedings, all the parties
have been given their day in court. That they are now
before this Court is attestation enough that they were not
denied due process of law.
From the foregoing disquisitions, it is unmistakable that all
the requirements for the valid exercise of the power of
eminent domain have been complied with. Thus, our
answer to the singular and fundamental issue in these
consolidated cases is: YES, the NHA may validly expropriate
the subject parcels of land.
5. [G.R. No. 97761. April 14, 1999]
31

AGUEDA DE VERA, MARIO DE LA CRUZ, EVANGELINE DELA
CRUZ, and EDRONEL DE LA CRUZ, petitioners, vs. HON.
COURT OF APPEALS, and RICARDO RAMOS, respondents.
FACTS: On December 15, 1955, respondent Ramos was
issued Homestead Patent No. V-62617 for a parcel of land,
including Portion B and C, subject of herein litigation.
He then filed an action for recovery of possession against
several persons including petitioners. OCT No. P5619 was
subsequently issued in his name.
The case eventually reached the Supreme Court which in a
decision dated January 27, 1981 upheld the validity of
Ramos title.
On April 27, 1981, Ramos wrote petitioners informing them
that the land on which their house is built is on his titled
property and gave them an option to buy or lease the lot.
Ignored by petitioners, respondent Ramos instituted an
action for recovery of property with damages.
Petitioners, for their defense, claimed that the action filed
23 years is already barred by prescription and/or laches.
Meanwhile in 1983 petitioner constructed a house of strong
materials on the land. After trial, judgment was rendered
declaring respondent Ramos the owner of the lots and
ordered petitioners to vacate and deliver possession to
Ramos, to remove all improvements on the property and to
pay monthly rent.
The assailed decision was modified on appeal by the Court of
Appeals. Still not satisfied in the modified decision, the
petitioners appealed to this Court.
ISSUES:
a. Whether or not laches has set in - NO
b. Whether or not De Vera et al are possessor and builders in
bad faith - YES
RULING:
A. Laches is the failure of or neglect for an unreasonable and
unexplained length of time to do that which by exercising
due diligence, could or should have been done earlier, or to
assert a right within reasonable time, warranting a
presumption that the party entitled thereto has either
abandoned it or declined to assert it. Fundamentally, laches
is an equitable doctrine, its application is controlled by
equitable considerations. Concomitantly, it is a better rule
that courts, under the principle of equity, will not be guided
or bound strictly by the statute of limitations or the doctrine
of laches when to do so, manifest wrong or injustice would
result.
Under the factual milieu of the case at bar, private
respondent's failure to assert his rights over subject parcel of
land for 23 years (1958-81) was due to the prolonged
Property Digests (Articles 440 461)
litigation he was embroiled with the herein petitioners, in
Civil Case No. Br. II-162. As the validity of his patent itself
was being questioned, the cause of action of private
respondent vis-a-vis the land he acquired by homestead
patent had to be kept dormant, pending determination of
the validity of the said homestead patent. Therefore, the
delay is not unreasonable and considering that the essence
of laches is the unreasonableness of the delay in the
prosecution or institution of a case, the principle of laches
finds no room for application here.
Furthermore, the question of laches is addressed to the
sound discretion of the court, and we find no fact or
circumstance of such substance as to disturb the lower
court's finding on this point. Thus, from the foregoing,
laches cannot defeat private respondent's ownership and
recovery of possession of Portions B and C.
B. Records disclose that prior to the construction in 1983 of
petitioners' house on the land under controversy (Portions B
and C), a demand letter dated April 27, 1981 was sent by
private respondent to the petitioners, informing them the
land they were possessing and occupying is within his
(private respondent's) titled property. In the same letter,
the private respondent gave petitioner Agueda de Vera the
option to either pay him the value of the property or lease
the same on a yearly or monthly basis.
However, the contending parties failed to reach a
compromise agreement. The lower court found, that the
defendants (herein petitioners) are occupying . . . an area of
22 square meters (Portions B and C), . . . , in which land,
defendants constructed a house of strong materials in 1983
after dismantling heir (sic) previous building erected thereon
on or about January or February, 1970.
The facts and circumstances aforestated are outward acts
and proven conduct indicating bad faith of petitioners as
possessor and builder.
Under Articles 449 and 450, the landowner has three
alternative rights, either: 1. to appropriate what has been
built without any obligation to pay indemnity therefor; or 2.
to demand the builder to remove what he had built; or 3. to
compel the builder to pay the value of the land.
In any event, he (landowner) is entitled to be indemnified by
the builder in bad faith, pursuant to Article 451 supra.
In the case under consideration, private respondent Ricardo
Ramos availed of the second alternative, which option is
legally feasible under the attendant facts and circumstances.
5. REMEDIAL LAW; EVIDENCE; TAX DECLARATIONS; NOT
PROOF OF RIGHT OF POSSESSION. - The tax declarations
prove only the de Veras' claim of ownership, and when not
supported by other effective evidence, are no proof of the
right of possession of subject realty.
32

6. [G.R. No. 136456. October 24, 2000]
HEIRS OF RAMON DURANO, SR., RAMON DURANO III, AND
ELIZABETHHOTCHKISS DURANO, petitioners, vs. SPOUSES
ANGELES SEPULVEDA UY AND EMIGDIO BING SING UY,
SPOUSES FAUSTINO ALATAN AND VALERIANA GARRO,
AURELIA MATA, SILVESTRE RAMOS, HERMOGENES TITO,
TEOTIMO GONZALES, PRIMITIVA GARRO, JULIAN GARRO,
ISMAEL GARRO, BIENVENIDO CASTRO, GLICERIO BARRIGA,
BEATRIZ CALZADA, ANDREA MATA DE BATULAN, TEOFISTA
ALCALA, FILEMON LAVADOR, CANDELARIO LUMANTAO,
GAVINO QUIMBO, JUSTINO TITO, MARCELINO GONZALES,
SALVADOR DAYDAY, VENANCIA REPASO, LEODEGARIO
GONZALES, and RESTITUTA GONZALES, respondents.
FACTS: The case involves a 128-hectare parcel of land
located in the barrios of Dunga and Cahumayhumayan,
Danao City. Said lot was originally owned by Cebu Portland
Cement Company and was later on sold to the Durano
Corporation.
The Duranos instituted an action for damages against
spouses Uy et al. alleging that accused respondents is
officiating a hate campaign against them by lodging
complaints over the Duranos so-called invasion of their
(respondents) alleged properties in Cahumayhumayan,
Danao City. This was followed by another complaint which
depicted petitioners as oppressors, landgrabbers and Art. 451. In the cases of the two preceding articles, the
usurpers of respondents alleged rights.
Spouses UY. et al. on the other hand alleged that they were
the owners of the land and they acquired the same through
inheritance and the others acquired it through sale. In their
answer, they averred among others that before they can
vacate said property, Durano Corporation proceeded to
bulldoze the land destroying their plantings and
improvements and that they were unaware of anyone
claiming adverse possession or ownership of this land until
the bulldozing operations. The same lot were then sold by
Durano Corp to Durano III.
RTC rendered its decision in favor of Spouses Uy et al and
directed the Duranos to return and pay indemnity in
reparation of the destroyed properties during the demolition
and that Spouses Uy et a.l were in possession of the
properties in good faith.
The CA affirmed the RTC decision. Dissatisfied the Duranos
filed this petition.
ISSUES:
1. WON heirs of Duranos were builders in good faith?
2. WON the respondents are entitled to indemnity?
RULING: No. A purchaser of a parcel of land cannot close his
eyes to facts which should put a reasonable man upon his
guard, such as when the property subject of the purchase is
in the possession of persons other than the seller. A buyer
Property Digests (Articles 440 461)
who could not have failed to know or discover that the land
sold to him was in the adverse possession of another is a
buyer in bad faith. In the herein case, respondents were in
open possession and occupancy of the properties when
Durano & Co. supposedly purchased the same from Cepoc.
Petitioners made no attempt to investigate the nature of
respondents possession before they ordered demolition in
August 1970.
2. Yes. Since petitioners knew fully well the defect in
their titles, they were correctly held by the Court of Appeals
to be builders in bad faith.
The Civil Code provides:
Art. 449. He who builds, plants or sows in bad faith on the
land of another, loses what is built, planted or sown without
right of indemnity.
Art. 450. The owner of the land on which anything has been
built, planted or sown in bad faith may demand the
demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition
at the expense of the person who built, planted or sowed; or
he may compel the builder or planter to pay the price of the
land, and the sower the proper rent.
landowner is entitled to damages from the builder, planter
or sower.
Based on these provisions, the owner of the land has three
alternative rights:
(1) to appropriate what has been built without any
obligation to pay indemnity therefor;
(2) to demand that the builder remove what he had built; or
(3) to compel the builder to pay the value of the land, or pay
the rent in case of the sower.
In any case, the landowner is entitled to damages under
Article 451, abovecited.
The right of the owner of the land to recover damages from
a builder in bad faith is clearly provided for in Article 451 of
the Civil Code. Although said Article 451 does not elaborate
on the basis for damages, the Court perceives that it should
reasonably correspond with the value of the properties lost
or destroyed as a result of the occupation in bad faith, as
well as the fruits (natural, industrial or civil) from those
properties that the owner of the land reasonably expected
to obtain
7. [G.R. No. 120303. July 24, 1996]
FEDERICO GEMINIANO, MARIA GEMINIANO, ERNESTO
GEMINIANO, ASUNCION GEMINIANO, LARRY GEMINIANO,
and MARLYN GEMINIANO, petitioners, vs. COURT OF
APPEALS, DOMINADOR NICOLAS, and MARY A. NICOLAS,
respondents.
33

Doctrine:
Lessor in good faith and Builders in Good faith are not
synonymous. Article 1678 may apply to the formers case
and Art 448 may apply to the latters case. If a person knew
that his stay would likely end or that he knew somehow that
he is not the owner of the land then he is not a BPS in good
faith.
FACTS: It appears that subject lot was originally owned by
the petitioners' mother, Paulina Amado vda. de Geminiano.
On a 12-square-meter portion of that lot stood the
petitioners' unfinished bungalow, which the petitioners sold
to the private respondents, with an alleged promise to sell to
the latter that portion of the lot occupied by the house.
Subsequently, the petitioners' mother executed a contract of
lease over a 126 square-meter portion of the lot, including
that portion on which the house stood, in favor of the
private respondents for P40.00 per month for a period of 7
years.
The private respondents then introduced additional
improvements and registered the house in their names.
After the expiration of the lease contract, however, the
petitioners' mother refused to accept the monthly rentals. It
turned out that the lot in question was the subject of a suit,
which resulted in its acquisition by one Maria Lee in 1972.
Lee sold the lot to Lily Salcedo, who in turn sold it to the
spouses Dionisio.
Spouses Dionisio executed a Deed of Quitclaim over the said
property in favor of the petitioners.
The petitioners sent a letter addressed to private
respondent Mary Nicolas demanding that she vacate the
premises and pay the rentals in arrears within twenty days
from notice.
Upon failure of the private respondents to heed the
demand, the petitioners filed a complaint for unlawful
detainer and damages.
ISSUES:
1) Whether or not the respondents were builders in Good
faith?
2) Whether Art 448 or 1678 should be applied?
RULING:
1) No, they were not builders in good faith. The respondents
knew that their stay would end after the lease contract
expires. They cant bank on the promise, which was not in
writing, of the petitioners that the latter will sell the land to
them. According to 1403, an agreement for the sale of real
property or an interest therein is unenforceable, unless
some note or memorandum thereof be produced. Other
Property Digests (Articles 440 461)
than the alleged promise by petitioner, respondents had no
other evidence to prove their claim.
2) They are mere lessees in good faith; therefore Art 1678
may apply if the lessor chooses to appropriate the
improvements. But since the petitioners refused to exercise
that option, the private respondents cant compel them to
reimburse the one-half value of the house and
improvements. Neither can they retain the premises until
reimbursement is made. The private respondents sole right
then is to remove the improvements without causing any
more impairment upon the property leased than is
necessary.
8. [G.R. No. 126363. June 26, 1998]
THE CONGREGATION OF THE RELIGIOUS OF THE VIRGIN
MARY petitioner, vs. THE COURT OF APPEALS and SPOUSES
JEROME and TERESA PROTASIO, respondents.
FACTS: On December 26, 1964, Gervacio Serapio, the
grandfather of spouses Jerome and Teresa Protasio, sold to
the Congregation of the Religious of the Virgin Mary, two (2)
lots identified as Lot No. 5-A and Lot No. 5-C.
Subsequently, Gervacio died and his estate consisting of
several parcels of land was settled extra-judicially among his
heirs.
In October of 1989, spouses Protasio purchased Lot No. 5-B
from the heirs of Gervacio Serapio.
After 1 month from the said purchase, the spouses had the
subject lot surveyed and they discovered that 664 square
meters of their 858 square meters property was fenced and
occupied by RVM. They also found out that a building for the
boys' quarters and a portion of petitioner's gymnasium were
constructed inside Lot No. 5-B. The encroachment by RVM
on the spouses land was made without the latter's
knowledge and consent.
Despite repeated demands by the spouses, RVM failed and
refused to (1) restore to the spouses possession of the
encroached property; (2) demolish the improvements
constructed thereon, and (3) pay damages and back rentals.
RVM contends that even if it had admitted that it occupies
part of the litigated property, it averred that Lot No. 5-B was
supposed to be a road lot that would give their Lots 5-A and
5-C means of entry and egress to the public road.
It further claims that the spouses, as successors-in-interest
of Gervacio Serapio, have the obligation to respect the
perpetual use of Lot No. 5-B ceded to it by Serapio.
ISSUE: Whether RVM could legally possess/occupy part of
the said lot that could justify whether they are builders in
bad faith. -NO
34

RULING: RVM has no right whatsoever to possess and
construct permanent structures on the questioned land
owned by the spouses.
The Supreme Court took notice of the admittance of RVM in
its answer to the complaint that it introduced improvement
on the subject lot without the consent and knowledge of the
spouses.
It is thus a builder in bad faith.
Neither has RVM successfully shown any right to introduce
improvements on the said land (its claim of grant of
perpetual use of the same as a road lot and its right to build
on a right of way both having been rejected above).
This being so, it follows that RVM was a builder in bad faith
in that, knowing that the land did not belong to it and that it
had no right to build thereon, it nevertheless caused the
improvements in question to be erected.
ARTICLE 451
1. G.R. No. 97761 April 14, 1999
AGUEDA DE VERA, MARIO DE LA CRUZ, EVANGELINE DELA
CRUZ, and EDRONEL DE LA CRUZ, petitioners, vs.
HON. COURT OF APPEALS, and RICARDO
RAMOS, respondents.
FACTS: Ricardo Ramos filed this complaint against Agueda de
Vera, et al. for recovery of property with damages alleging
that he is the legal and absolute owner of a certain parcel of
land known as Lot 2.
On the said parcel of land, the de Veras are occupying a
triangular portion wherein they have constructed a house of
strong and permanent materials on 1983 after removing
their previous building of light materials in January or
February of 1970.
The de Veras also allege that they have been in possession
of the land through their predecessor-in-interest, Teodoro
dela Cruz, who during his lifetime filed a miscellaneous sales
application( still pending) over the said lot and declared the
said lot for taxation purposes and after his death petitioners
subsequently by themselves, occupied the lot as owners,
before 1956.
Ramos demanded that the defendants to remove their
improvements and to vacate but the latter refused.
RTC- declared Ramos as the owner and ordered De Vera to
remove the improvements at their own expense, to vacate
and to pay monthly rent of 273.70 from April 1981 until
possession of the land is delivered to Ramos.
CA- modified RTCs decision by deleting the monthly rents.
Property Digests (Articles 440 461)
Hence, this petition. De Vera alleged that they were not
possessors in bad faith of the disputed property, thus, they
cannot be made liable to private respondent for their use
thereof.
ISSUES:
1. WON Ramos is barred by Laches. NO
2. WON the de Veras are possessors and builders in bad
faith. YES
RULING:
1. Records disclosed that on September 20, 1947, private
respondent Ricardo Ramos filed a homestead application for
the parcel of land in litigation here. Such was approved and
an OCT was issued to him on 1955. private respondent's
failure to assert his rights over subject parcel of land 23
years (1958-81) was due to the prolonged litigation.
Therefore, the delay is not unreasonable and considering
that the essence of laches is the unreasonableness of the
delay in the prosecution or institution of a case, the principle
of laches finds no room for application here.
2. The de Veras are possessors and builders in bad faith.
Prior to the construction in 1983 of their house on the land
under controversy a demand letter dated April 27, 1981 was
sent by Ramos, informing them that the land they were
possessing and occupying is within his titled property. In the
same letter, he gave de Vera the option to either pay him
the value of the property or lease the same on a yearly or
monthly basis. However, they failed to reach a compromise
agreement.
The facts and circumstances aforestated are "outward acts
and proven conduct" indicating bad faith of petitioners as
possessor and builder.
Articles 449, 450 and 451 of the New Civil Code, read:
Art. 449 He who builds, plants or sows in bad faith on the
land of another, losses what in built, planted or sown
without right to indemnity.
Art. 450 The owner of the land of which anything has
been built, planted or sown in bad faith may demand the
demolition of the work, or that the planting sowing be
removed, in order to replace things in their former condition
at the expense of the former condition at the expense of the
person who built, planted or sown or he may compel the
builder or planter to pay the price of the land and the sower
the proper rent.
Art. 451 In the cases of the two preceding articles, the
landowner is entitled to damages from the builder, planter
or sower
Under the aforecited Articles 449 and 450, the landowner
has three alternative rights, either:
35

1. to appropriate what has been built without any obligation
to pay indemnity therefor; or
2. to demand the builder to remove what he had built; or
3. to compel the builder to pay the value of the land.
In any event, he (landowner) is entitled to be indemnified by
the builder in bad faith, pursuant to Article 451.
In the case under consideration, private respondent Ricardo
Ramos availed of the second alternative, which option is
legally feasible under the attendant facts and circumstances.
NOTE: A possessor in good faith is one who is unaware that
there exists a flaw which invalidates his acquisition of the
thing, Good faith consists in the possessor's belief that the
persons from whom he received a thing was the owner of
the same and could convey his title. It consists in an honest
intention to abstain from taking any unconscientious
advantage of another, and is the opposite of fraud. Since
good faith is a state of the mind, and is not a visible, tangible
fact that can be seen or touched, it can only be determined
by outward acts and proven conduct. It implies freedom
from knowledge and circumstances which ought to put a
person on inquiry..
2. G.R. No. 136456 October 24, 2000
HEIRS OF RAMON DURANO, SR., RAMON DURANO III, AND
ELIZABETHHOTCHKISS DURANO, petitioners, vs.
SPOUSES ANGELES SEPULVEDA UY AND EMIGDIO BING
SING UY, SPOUSES FAUSTINO ALATAN AND VALERIANA
GARRO, AURELIA MATA, SILVESTRE RAMOS, HERMOGENES
TITO, TEOTIMO GONZALES, PRIMITIVA GARRO, JULIAN
GARRO, ISMAEL GARRO, BIENVENIDO CASTRO, GLICERIO
BARRIGA, BEATRIZ CALZADA, ANDREA MATA DE BATULAN,
TEOFISTA ALCALA, FILEMON LAVADOR, CANDELARIO
LUMANTAO, GAVINO QUIMBO, JUSTINO TITO, MARCELINO
GONZALES, SALVADOR DAYDAY, VENANCIA REPASO,
LEODEGARIO GONZALES, and RESTITUTA
GONZALES, respondents.
FACTS: The case started when DURANO et al filed a case
against UY et al for alleged hate campaign accusing DURANO
et al as oppressors, land grabbers and usurpers of UY et als
alleged rights.
Uy et al sought the dismissal of the case and demanded
actual damages for the cost of the improvements they made
on the land.
To prove their ownership over the land, UY et al alleged
that:
1. They received notice that the lands which they are
tilling and residing in, formerly owned by the Cebu
Portland Cement Company (CEPOC), had been
purchased by DURANO & CO., INC. and ordered
them to vacate the premises.
2. Even before they received the notice, employees of
DURANO & CO. proceeded to bulldoze the lands,
destroyed their plantings and improvements.
Property Digests (Articles 440 461)
3. Some of them inherited these properties from their
parents, who in turn inherited them from their own
parents.
4. Some purchased these properties from former
occupants.
5. They and their predecessors were responsible for
the plantings and improvements on the property.
6. They were the ones who sought for the properties
to be tax-declared in their respective names, and
they continually paid the taxes thereto.
7. They were unaware of anyone claiming adverse
possession or ownership of these lands until the
bulldozing operations in 1970.
On the other hand, Heirs of DURANO claimed that DURANO
& CO., INC acquired the property from Cebu Portland
Cement Company (CEPOC) and DURANO CO subsequently
sold the property to DURANO III and procured the
registration of the land.
RTC ruled in favor of respondents
CA affirmed RTCs ruling for the return of the property to
respondents; it declared that petitioners were possessors in
bad faith, and were not entitled to reimbursement for useful
expenses incurred in the conversion of the property into
sugarcane lands. DURANO et al were possessors in bad faith,
and were not entitled to reimbursement for useful expenses
incurred in the conversion of the property into sugarcane
lands. Further, the Court found out that:
1. CEPOC had no registered title over the property as
indicated in the titles.
2. Deed of Absolute Sale between CEPOC and
DURANO was not notarized and thus, unregistrable.
3. The issuance of the titles in favor of DURANO III was
attended by fraud.
4. UY et al were able to demonstrate possession in the
concept of owner.
ISSUE:
1. Who is the rightful owner of the property?
RESPONDENTS
2. WON the HEIRS OF DURANO were builders on bad
faith. YES.
3. WON the HEIRS OF DURANO should return the
properties to the UY ET AL. and pay indemnity in
reparation of the destroyed properties overran by
the bulldozers. YES.
RULING:
1. The records clearly bear out respondents prior and actual
possession; more exactly, the records indicate that
respondents possession has ripened into ownership by
acquisitive prescription.
Ordinary acquisitive prescription, in the case of immovable
property, requires possession of the thing in good faithand
with just title,for a period of ten years. A possessor is
deemed to be "in good faith" when he is not aware of any
36

flaw in his title or mode of acquisition of the property. On
the other hand, there is "just title" when the adverse
claimant came into possession of the property through one
of the modes for acquiring ownership recognized by law, but
the grantor was not the owner or could not transmit any
right. The claimant by prescription may compute the ten-
year period by tacking his possession to that of his grantor or
predecessor-in-interest.
The evidence shows that respondents successfully complied
with all the requirements for acquisitive prescription to set
in. The properties were conveyed to respondents by
purchase or inheritance, and in each case the respondents
were in actual, continuous, open and adverse possession of
the properties. They exercised rights of ownership over the
lands, including the regular payment of taxes and
introduction of plantings and improvements. They were
unaware of anyone claiming to be the owner of these lands
other than themselves until the notices of demolition in
1970 --- and at the time each of them had already completed
the ten-year prescriptive period either by their own
possession or by obtaining from the possession of their
predecessors-in-interest.
Turning now to petitioners claim to ownership and title, it is
uncontested that their claim hinges largely on TCT Nos. T-
103 and T-104, issued in the name of petitioner Ramon
Durano III. However, the validity of these certificates of title
was put to serious doubt by the following: (1) the certificates
reveal the lack of registered title of Cepoc to the properties;
(2) the alleged reconstituted titles of Cepoc were not
produced in evidence; and (3) the deed of sale between
Cepoc and Durano & Co. was unnotarized and thus,
unregistrable.
We observe that the above-enumerated circumstances
indicate none too clearly the weakness of petitioners
evidence on their claim of ownership.
2. In this case, UY et al in open possession and occupancy of
the properties when DURANO & CO. supposedly purchased
the same from CEPOC. The HEIRS OF DURANO et al made no
attempt to investigate the nature of UY et als possession
before they ordered demolition in August 1970.
Also, the purchase of the property by Ramon DURANO III
from DURANO & CO. could not be said to have been in good
faith.
1. DURANO III acquired the property with full
knowledge of UY et als occupancy thereon.
2. There was undue haste in the conveyance of the
property to DURANO III, as the bulldozing
operations by DURANO & CO. were still underway
when the deed of sale to Durano III.
3. There is no indication that DURANO & CO.
attempted to transfer registration of the property in
its name before it conveyed the same to DURANO
III.
Property Digests (Articles 440 461)
3. Since petitioners knew fully well the defect in their titles,
they are held to be builders in bad faith. The Civil Code
provides:
Art. 449. He who builds, plants or sows in bad faith
on the land of another, loses what is built, planted
or sown without right of indemnity.
Art. 450. The owner of the land on which anything
has been built, planted or sown in bad faith may
demand the demolition of the work, or that the
planting or sowing be removed, in order to replace
things in their former condition at the expense of
the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the
land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles,
the landowner is entitled to damages from the
builder, planter or sower.
Based on these provisions, the owner of the land has three
alternative rights:
(1) to appropriate what has been built without any
obligation to pay indemnity therefor, or
(2) to demand that the builder remove what he
had built, or
(3) to compel the builder to pay the value of the
land. In any case, the landowner is entitled to
damages under Article 451, abovecited.
We sustain the return of the properties to respondents and
the payment of indemnity as being in accord with the reliefs
under the Civil Code.
ARTICLE 452
1. EDITHA ALVIOLA VS CA, HEIRS OF TINAGAN (ART.
453/448)
FACTS: Victoria Tinagan purchased 2 parcels of land from
Mauro Tinagan. Victoria and her son, Agustin Tinagan, took
possession of the same. A portion of such land was occupied
by Spouses Alviola. Spouses Alviola constructed a copra
dryer and a store on such lot with the permission of Victoria.
Victoria and Agustin died. 13 years after, Heirs of Agustin
wanted to recover possession of such lot, they filed a
complaint for recovery of possession against Sps. Alviola
demanding them to vacate and remove the copra dryer and
store and to pay rental for the lot. Sps. Alviola contend that
they are rightful possessors by occupation of the said
properties for more than twenty years.
RTC ruled in favor of respondents declaring them
as the absolute owners thereof and ordering petitioners to
vacate, to surrender the possession and to remove the store
and dryer.
CA affirmed RTCs ruling.
37
 Property Digests (Articles 440 461)
ISSUE/S:
1.) W/ Sps. Alviola are builders in good faith? NO
2.) W/ Heirs of Agustin are landowners in good ARTICLE 453
faith? NO
3.) What is the effect if both the landowner and 1. G.R. No. 134329 January 19, 2000
builder are in bad faith? Both are deemed to VERONA PADA-KILARIO and RICARDO
be in good faith. Art. 448 will apply KILARIO, petitioners, vs.
4.) W/ Art. 448 is applicable in this case? NO COURT OF APPEALS and SILVERIO PADA, respondents.

RULING:
1.) Sps Alviola are builders in bad faith because
they built the copra dryer and store on the land
knowing that such land belongs to Victoria.

2.) Heirs of Agustin are owners in bad faith

because they knew of the arrangement
between Victoria and Sps. Alviola regarding
such construction. ( An owner is in bad faith if
he knew of the act of builder, planter, sower
and he didnt oppose to it)
3.) It is provided in Art. 453 that if both the
landowner and builder is in bad faith, they
should be treated as though they are in good
FACTS: Jacinto owns a parcel of land. During his lifetime, his
faith. Thus, for purposes of indemnity, Art. 448
half-brother Feliciano asked permission to build his house on
will apply.
the northern part of the land. Feliciano and his children, one
of which is Verona Pada-Kilario, lived there since 1960.
4.) However, while both the landowner and
builder in this case are in bad faith, Article 448
In 1951, when Jacinto died, his heirs executed an
will still not apply because the SC ruled that for
extrajudicial settlement of his estate. It was embodied in a
a construction to fall under the provision of Art.
private document which they did not register in the Register
448, such construction must be of a permanent
of Deeds in Leyte. The northern part of the land was granted
character. It was found out in this case that the
to Marciano and Ananias.
copra dryer and store, though made up of
hollow blocks and cements, were transferrable
In 1978, Ananias daughter (Juanita) sold her fathers rights
in nature. Thus, it doesnt fall under the
to the land to Paredes.
provision of Art. 448.
In 1993, Marcianos daughter (Maria) sold her fathers rights
Senator Arturo Tolentino explained that: to
to her cousin Silverio (Higinos son).
fall within the provision of Art. 448, the
construction must be of permanent character,
Silverio immediately asked the Sps. Kilario to vacate the
attached to the soil with an idea of perpetuity,
property but they refused. So on June 26, 1995, Silverio filed
but if it is of a transitory character or is
an ejectment suit against them.
transferrable, there is no accession, and the
builder must remove the construction. The
However on July 24, 1996, the heirs of Amador (Concordia,
proper remedy of the landowner is an action to
et al.) executed a Deed of Donation in favour of Sps. Kilario
eject the builder form the land.
their respective shares as co-owner of the land.
DOCTRINE: For a construction to fall under the
Hence, in February 1196, Sps. Kilario filed their Answer to
provision of Art. 448, it must be of permanent
the ejectment complaint, alleging that:
character. Since Article 448 is not applicable,
1. They own the northern part of the land by virtue of the
the SC can now decide what to impose without
donation;
limiting itself to the options provided in art.
2. The extrajudicial partition executed by the heirs in 1951 is
448.
void since it is only embodied in a private document and was
not registered in the Register of Deeds
Hence, in this case the SC ordered Sps. Alviola
to pay the rent, remove the improvements and
ISSUES:
vacate the land.
1. WON Silverio is a landowner in bad faith (NO);
38

2. WON Sps. Kilario are builders in good faith (NO);
3. WON the Article 454 in relation to Article 447 applies to
them (NO)
HELD: Silverio is not a landowner in bad faith and Sps. Kilario
are not builders in good faith; thus Article 454 in relation to
Article 447 does not apply to them.
Silverio is not a landowner in bad faith because as soon as
he bought the subject land in 1993, he immediately
informed the Sps. Kilario about it and asked them to vacate.
He immediately expressed his objection to their refusal to
vacate, as shown by the series of barangay meetings to
reach a settlement and eventually the filing of the ejectment
suit in June 1995. (Note: As defined by Art. 453 par. 2, there
is bad faith on the part of the landowner whenever the act
was done with his knowledge and without opposition on his
part.)
On the other hand, Sps. Kilario are not builders in good
faith. Considering that they were in possession of the
subject property by sheer tolerance of its owners, they knew
that their occupation of the premises may be terminated any
time. Persons who occupy the land of another at the latter's
tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that they
will vacate the same upon demand, failing in which a
summary action for ejectment is the proper remedy against
them. Thus, they cannot be considered possessors nor
builders in good faith. It is well-settled that both Article 448
and Article 546 of the New Civil Code which allow full
reimbursement of useful improvements and retention of the
premises until reimbursement is made, apply only to a
possessor in good faith, i.e., one who builds on land with the
belief that he is the owner thereof. Verily, persons whose
occupation of a realty is by sheer tolerance of its owners are
not possessors in good faith.
Moreover, the donation made by Concordia, et al. on July
1995 in their favour was void because Concordia, et al. did
not have any right over the disputed lot. The extrajudicial
partition in 1951 showed that what was adjudicated to
Amador (their predecessor in interest) is actually another
parcel of land and not Cad. Lot. 5581. The donation was
merely an afterthought to extend Sps. Kilarios occupation
therein.
2. G.R. No. 100866 July 14, 1992
REBECCA BOYER-ROXAS and GUILLERMO
ROXAS, petitioners, vs.
HON. COURT OF APPEALS and HEIRS OF EUGENIA V.
ROXAS, INC., respondents.
Facts: The properties in dispute are originally owned by
Eugenia Roxas. After her death, the heirs of Eugenia V.
Roxas, among them the petitioners (Rebecca & Guillermo)
herein, decided to form a corporation Heirs of Eugenia V.
Roxas, Incorporated (private respondent herein) with the
Property Digests (Articles 440 461)
inherited properties as capital of the corporation. The
corporation was incorporated on December 4, 1962 with the
primary purpose of engaging in agriculture to develop the
inherited properties. The Articles of Incorporation of the
respondent corporation were amended in 1971 to allow it to
engage in the resort business. Accordingly, the corporation
put up a resort known as Hidden Valley Springs Resort where
the questioned properties are located.
Respondent Corporation filed a complaint for recovery of
possession against Rebecca and Guillermo. Respondent
corporation alleged that Rebecca is in possession of two (2)
houses, one of which is still under construction, built at the
expense of the respondent corporation; and that her
occupancy on the two (2) houses was only upon the
tolerance of the respondent corporation.
Respondent corporation alleged that Guillermo occupies a
house which was built at the expense of the former during
the time when Guillermo's father, Eriberto Roxas, was still
living and was the general manager of the respondent
corporation; that the house was originally intended as a
recreation hall but was converted for the residential use of
Guillermo; and that Guillermo's possession over the house
and lot was only upon the tolerance of the respondent
corporation.
In both cases, the respondent corporation alleged that the
petitioners never paid rentals for the use of the buildings
and the lots and that they ignored the demand letters for
them to vacate the buildings.
Petitioners on the other hand claimed that they are heirs of
Eugenia V. Roxas and therefore, co-owners of the Hidden
Valley Springs Resort; and as co-owners of the property, they
have the right to stay within its premises.
The cases were consolidated and tried jointly.
RTC ruled in favor of the Corporation. It ordered :
1.Rebecca to
a) vacate the residential house near the Balugbugan
pool located inside the premises of the Hidden Valley
Springs Resort at Limao, Calauan, Laguna;
b) Pay the plaintiff the amount of P300.00 per month
from September 10, 1983, for her occupancy of the
residential house until the same is vacated;
c) Remove the unfinished building erected on the land
of the plaintiff within ninety (90) days from receipt of
this decision;
d) Pay the plaintiff the amount of P100.00 per month
from September 10, 1983, until the said unfinished
building is removed from the land of the plaintiff; and
e) Pay the costs.
2) Guillermo Roxas to:
a) Immediately vacate the residential house near the
tennis court located within the premises of the Hidden
Valley Springs Resort at Limao, Calauan, Laguna;
39

b) Pay the plaintiff the amount of P300.00 per month
from September 10, 1983, for his occupancy of the said
residential house until the same is vacated; and
c) Pay the costs
CA- affirmed RTCs ruling
ISSUES:
1. WON petitioners are entitled to possession of the
buildings. NO
2. WON petitioners are builders in good faith. NO
RULING:
1. There is no dispute that title over the questioned
land where the Hidden Valley Springs Resort is
located is registered in the name of the
corporation. The records also show that the staff
house being occupied by petitioner Rebecca Boyer-
Roxas and the recreation hall which was later on
converted into a residential house occupied by
petitioner Guillermo Roxas are owned by the
respondent corporation.
Regarding properties owned by a corporation, we
stated in the case of Stockholders of F. Guanzon
and Sons, Inc. v. Register of Deeds of Manila, (6
SCRA 373 [1962]):
xxx xxx xxx
. . . Properties registered in the name of the
corporation are owned by it as an entity separate
and distinct from its members. While shares of
stock constitute personal property, they do not
represent property of the corporation. The
corporation has property of its own which consists
chiefly of real estate (Nelson v. Owen, 113 Ala., 372,
21 So. 75; Morrow v. Gould, 145 Iowa 1, 123 N.W.
743). A share of stock only typifies an aliquot part of
the corporation's property, or the right to share in
its proceeds to that extent when distributed
according to law and equity (Hall & Faley v.
Alabama Terminal, 173 Ala., 398, 56 So. 235), but its
holder is not the owner of any part of the capital of
the corporation (Bradley v. Bauder, 36 Ohio St., 28).
Nor is he entitled to the possession of any definite
portion of its property or assets (Gottfried V. Miller,
104 U.S., 521; Jones v. Davis, 35 Ohio St., 474). The
stockholder is not a co-owner or tenant in common
of the corporate property (Harton v. Johnston, 166
Ala., 317, 51 So. 992). (at pp. 375-376)
We find nothing irregular in the adoption of the Resolution
by the Board of Directors. The petitioners' stay within the
questioned properties was merely by tolerance of the
respondent corporation in deference to the wishes of
Eufrocino Roxas, who during his lifetime, controlled and
managed the corporation. Eufrocino Roxas' actions could not
have bound the corporation forever. The petitioners have
not cited any provision of the corporation by-laws or any
resolution or act of the Board of Directors which authorized
Property Digests (Articles 440 461)
Eufrocino Roxas to allow them to stay within the company
premises forever. We rule that in the absence of any existing
contract between the petitioners and the respondent
corporation, the corporation may elect to eject the
petitioners at any time it wishes for the benefit and interest
of the respondent corporation.
2. The construction of the unfinished building started when
Eriberto Roxas, husband of Rebecca Boyer-Roxas, was still
alive and was the general manager of the respondent
corporation. The couple used their own funds to finance the
construction of the building. The Board of Directors of the
corporation, however, did not object to the construction.
They allowed the construction to continue despite the fact
that it was within the property of the corporation. Under
these circumstances, we agree with the petitioners that the
provision of Article 453 of the Civil Code should have been
applied by the lower courts.
Article 453 of the Civil Code provides:
If there was bad faith, not only on the part
of the person who built, planted or sown
on the land of another but also on the part
of the owner of such land, the rights of one
and the other shall be the same as though
both had acted in good faith.
In such a case, the provisions of Article 448 of the Civil
Code govern the relationship between petitioner Rebecca-
Boyer-Roxas and the respondent corporation, to wit:
Art. 448 The owner of the land on which
anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own
the works, sowing or planting after payment of the
indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price
of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably
more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the
buildings or trees after proper indemnity. The
parties shall agree upon the terms of the lease and
in case of disagreement, the court shall fix the
terms thereof.
The ruling of the CA was modified with respect to Par. 1 ( c
)and (d). Such part of the decision was deleted. In their
stead, the petitioner Rebecca Boyer-Roxas and the
respondent corporation are ordered to follow the provisions
of Article 448 of the Civil Code as regards the questioned
unfinished building.
3. G.R. No. 120303. July 24, 1996]
FEDERICO GEMINIANO, MARIA GEMINIANO, ERNESTO
GEMINIANO, ASUNCION GEMINIANO, LARRY GEMINIANO,
and MARLYN GEMINIANO, petitioners, vs. COURT OF
APPEALS, DOMINADOR NICOLAS, and MARY A.
NICOLAS, respondents.
40

FACTS: Lot No. 3765-B-1 containing an area of 314 square
meters was originally owned by the Paulina Amado vda. de
Geminiano.
On a 12-square-meter portion of that lot stood the Federico
and others unfinished bungalow, which the petitioners sold
in November 1978 to the Sps. Nicolas for the sum of
P6,000.00, with an alleged promise to sell to the latter that
portion of the lot occupied by the house.
Paulina executed a contract of lease over a 126 square-
meter portion of the lot, including that portion on which the
house stood, in favor of the Sps. Nicolas for P40.00 per
month for a period of seven years commencing on 15
November 1978. They then introduced additional
improvements and registered the house in their names.
It turned out that the lot in question was the subject of a
suit, which resulted in its acquisition by one Maria Lee in
1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn
sold it in 1984 to the spouses Agustin and Ester Dionisio.
On 14 February 1992, the Dionisio spouses executed a Deed
of Quitclaim over the said property in favor of the Federico
and others.
Upon Sps. Nicolas failure to vacate the land upon demand,
Federico and others filed a complaint for unlawful detainer
and damages.
RTC ordered respondents to vacate. Upon motion for
reconsideration, the RTC rendered a new judgment: (1)
ordering the petitioners to reimburse the private
respondents for the value of the house and improvements in
the amount of P180,000.00 and to pay the latter P10,000.00
as attorney's fees and P2,000.00 as litigation expenses; and
(2) allowing the private respondents to remain in possession
of the premises until they were fully reimbursed for the
value of the house. It ruled that since the private
respondents were assured by the petitioners that the lot
they leased would eventually be sold to them, they could be
considered builders in good faith, and as such, were entitled
to reimbursement of the value of the house and
improvements with the right of retention until
reimbursement had been made.
CA- affirmed the decision of the RTC
ISSUE:
1. WON respondents are builders in good faith or
mere lessees. MERE LESSEES
2. Whether Art 448 or 1678 should be applied?
ARTICLE 1678
RULING:
1. In this case both parties admitted that the land in
question was originally owned by petitioners mother
Property Digests (Articles 440 461)
(Paulina). . The land was allegedly acquired later by one
Maria Lee by virtue of an extrajudicial foreclosure of
mortgage. Lee, however, never sought a writ of possession
in order that she gain possession of the property in
question. The petitioners' mother therefore remained in
possession of the lot.
It is undisputed that the private respondents came into
possession of a 126 square-meter portion of the said lot by
virtue of a contract of lease executed by the petitioners'
mother in their favor. The juridical relation between the
petitioners' mother as lessor, and the private respondents as
lessees, is therefore well-established, and carries with it a
recognition of the lessor's title. Being mere lessees, the
private respondents knew that their occupation of the
premises would continue only for the life of the
lease. Plainly, they cannot be considered as possessors nor
builders in good faith.
With regard to the inaction of Federico and others when Sps.
Nicolas were introducing improvements, that does not make
them and bad faith. It is because by virtue of the lease, the
right of the owner to enjoy the property was transferred to
the lessees, in this case, the Sps. Nicolas.
2. Article 448 of the Civil Code, in relation to Article 546 of
the same Code, which allowed full reimbursement of useful
improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good
faith, i.e., one who builds on land with the belief that he is
the owner thereof. It does not apply where ones only
interest is that of a lessee under a rental contract; otherwise,
it would always be in the power of the tenant to "improve"
his landlord out of his property.
Anent the alleged promise of the petitioners to sell the lot
occupied by the private respondents' house, the same was
not substantiated by convincing evidence. Neither the deed
of sale over the house nor the contract of lease contained an
option in favor of the respondent spouses to purchase the
said lot. And even if the petitioners indeed promised to sell,
it would not make the private respondents possessors or
builders in good faith so as to be covered by the provisions
of Article 448 of the Civil Code. The latter cannot raise the
mere expectancy of ownership of the aforementioned lot
because the alleged promise to sell was not fulfilled nor its
existence even proven.
The rights of the private respondents as lessees are
governed by Article 1678 of the Civil Code which allows
reimbursement to the extent of one-half of the value of the
useful improvements.
It must be stressed, however, that the right to indemnity
under Article 1678 of the Civil Code arises only if the lessor
opts to appropriate the improvements. Since the petitioners
refused to exercise that option,[20] the private respondents
cannot compel them to reimburse the one-half value of the
41

house and improvements. Neither can they retain the
premises until reimbursement is made. The private
respondents' sole right then is to remove the improvements
without causing any more impairment upon the property
leased than is necessary.
Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and
548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
xxx xxx xxx
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of
the property leased, the lessor upon the termination of the
lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer
damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be
entitled to any reimbursement, but he may remove the
ornamental objects, provided no damage is caused to the
principal thing, and the lessor does not choose to retain
them by paying their value at the time the lease is
extinguished.PRINCIPLE: Lessor in good faith and Builders in
Good faith are not synonymous. Article 1678 may apply to
the formers case and Art 448 may apply to the latters case.
If a person knew that his stay would likely end or that he
knew somehow that he is not the owner of the land then he
is not a BPS in good faith.
4. G.R. No. 152423 December 15, 2010
SPOUSES MARCOS R. ESMAQUEL and VICTORIA
SORDEVILLA, Petitioners, vs.
MARIA COPRADA, Respondent.
Facts: On Feb 24, 1997, petitioners, spouses Marcos
Esmaquel and Victoria Sordevilla filed an ejectment
case against respondent Maria V. Coprada before the 2nd
MCTC of Magdalena, Liliw and Majayjay Laguna. They
claimed that they are the registered owners of a parcel of
land situated in M.H. Del Pilar St., Barangay San Miguel,
Majayjay, Laguna, containing an area 253 sq. M. and covered
by TCT No. T-93542.
Property Digests (Articles 440 461)
(previously)In 1945, respondent was able to persuade the
petitioners to allow her and her family to use and occupy the
land for their residence, under the condition that they will
vacate the premises should petitioners need to use the
same. They were allowed to construct their residential
house. Since then, the petitioners never made an attempt to
drive them away out of pity. They occupied the subject
premises free of rent, including payment of realty taxes.
Respondent's present circumstances have completely
improved. So, the petitioners verbally demanded that
respondent vacate the subject land, but the latter refused.
Thus, petitioners were forced to send a demand letter for
respondent to vacate the subject premises. However,
respondent still ignored said demand, which prompted
petitioners to bring a complaint before the barangay
authorities. No settlement was reached, hence,an ejectment
case against the respondent was filed before the MCTC.
Respondent admitted that petitioners are the registered
owners of the subject land.
However, she averred that in 1945, it was Emiliana Coprada
(petitioner Victoria Sordevilla's mother and original owner of
the subject land) and not the petitioners who gave
permission to her late husband Brigido Coprada to use the
subject lot. Brigido and his family cleared the area and built
therein a nipa hut to dwell in. When Emiliana died, the
ownership of the property was inherited by her only child,
petitioner Victoria Sordevilla.
Respondent alleged that sometime in the early 1960's,
petitioner Victoria offered the said lot for sale for 2,000.00
to respondent, who readily agreed. The purchase price was
paid in installments and was fully paid in 1962.The
agreement was never reduced to writing. After the sale,
respondent built on the subject land a semi-concrete
structure. Respondent stated that petitioners' claim is
barred by laches. Even granting, without admitting, that
respondent's claim of ownership over the property is
improper because petitioners are the registered owners
thereof, respondent argued that she is a builder in good
faith, because she was able to build the structure on the
subject lot with the prior permission of the owner.
MCTC- dismissed the complaint; there was a valid sale
RTC- reversed; occupation of respondents was by mere
tolerance
CA- reversed; affirmed MCTC ruling
Issue: WON respondent is a builder in good faith?
Ruling: NO. In respondent's Answer filed before the MCTC,
she claimed that since she was able to build a structure on
the subject lot with the prior permission from the owner,
she is a builder in good faith and thus entitled to be
reimbursed the necessary and useful expenses under
Articles 546 and 548 of the Civil Code of the Philippines.
42

Without such reimbursement, she has the right of retention
over the property and she cannot just be ejected from the
premises.
Respondent's argument does not hold water. Since
respondent's occupation of the subject property was by
mere tolerance, she has no right to retain its possession
under Article 448 of the Civil Code. She is aware that her
tolerated possession may be terminated any time and she
cannot be considered as builder in good faith. It is well
settled that both Article 448 and Article 546 of the New Civil
Code, which allow full reimbursement of useful
improvements and retention of the premises until
reimbursement is made, apply only to a possessor in good
faith, i.e., one who builds on land with the belief that he is
the owner thereof. Verily, persons whose occupation of a
realty is by sheer tolerance of its owners are not possessors
in good faith. At the time respondent built the
improvements on the premises in 1945, she knew that her
possession was by mere permission and tolerance of the
petitioners; hence, she cannot be said to be a person who
builds on land with the belief that she is the owner thereof.
ARTICLE 457
1. G.R. No. L-46963 March 14, 1994
GLORIA A. FERRER, petitioner, vs.
HON. ANTONIO BAUTISTA, MARIANO BALANAG, AND
MAGDALENA DOMONDON, respondents.
Facts: Under controversy is a strip of land south of Lot 1980
of the Cadastral survey of Aringay, La Union. Petitioner
claims its ownership by virtue of accretion, she being the
owner of Lot 1980 covered by TCT No. T-3280, which is
immediately north of the land in question. On the other
hand, private respondents equally assert ownership over the
property on account of long occupation and by virtue of
Certificate of Title No. P-168, in the name of respondent
Magdalena Domondon, pursuant to Free Patent No. 309504
issued on 24 January 1966.
On 23 March 1976, petitioner Gloria A. Ferrer filed a
complaint with Branch III of the then Court of First Instance
of La Union to "Quiet Title to Real Property" against herein
respondents Mariano Balanag and Magdalena Domondon.
The case was denominated Civil Case No. A-514.
Prior to Civil Case No. A-514, petitioner had also filed with
the Court of First Instance of La Union, Branch III, a
complaint for reivindicacion (Civil Case No. A-86), dated 25
November 1965, against private respondents. Herein
respondent Judge, who also handled the case, dismissed, on
10 February 1976, the complaint, without prejudice, on the
Property Digests (Articles 440 461)
ground that the court had no authority to cancel or annul
the decree and the title issued by the Director of Lands on
the basis of a mere collateral attack.
On 11 March 1976, private respondents also moved for the
dismissal of Civil Case No. 514-A.
On 07 December 1976, Judge Antonio G. Bautista issued an
order dismissing petitioner's complaint.
Issue: Who owns the accretion?
Ruling: The registered owner. Ferrer.
Article 457 of the Civil Code, under which petitioner claims
ownership over the dispute parcel of land, provides:
Art. 457. To the owners of lands adjoining
the banks of rivers belong the accretion
which they gradually receive from the
effects of the current of the waters.
Undoubtedly, plaintiff is the lawful owner of the accretion,
she being the registered owner of Lot 1980 which adjoins
the alluvial property.
Alluvion gives to the owners of lands adjoining the banks of
rivers or streams any accretion which is gradually received
from the effects of the current of waters. The rationale for
the rule is to provide some kind of compensation to owners
of land continually exposed to the destructive force of water
and subjected to various easements.
The Director of Lands has no authority to grant a free patent
over land that has passed to private ownership and which
has thereby ceased to be public land. Any title thus issued or
conveyed by him would be null and void. The nullity arises,
not from fraud or deceit, but from the fact that the land is
no longer under the jurisdiction of the Bureau of Lands, the
latter's authority being limited only to lands of public
dominion and not those that are privately owned.
Herein private respondents, therefore, acquired no right or
title over the disputed land by virtue of the free patent since
at the time it was issued in 1966, it was already private
property and not a part of the disposable land of the public
domain.
Although, ordinarily, a title becomes incontrovertible one
year after it is issued pursuant to a public grant, the rule
does not apply when such issuance is null and void. An
action to declare the nullity of that void title does not
prescribe; in fact, it is susceptible to direct, as well as to
collateral, attack.
2. G.R. No. L-17652 June 30, 1962
IGNACIO GRANDE, ET AL., petitioners, vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and
ESTEBAN CALALUNG, respondents.
43

Facts: IGNACIO GRANDE ET AL. were owners of a parcel of
land in the province of Isabela by inheritance from their
deceased mother Patricia Angui. When it was surveyed for
purposes of registration sometime in 1930, its northeastern
boundary was the Cagayan River. Since then, and for many
years thereafter, a gradual accretion on the northeastern
side took place, by action of the current of the Cagayan
River, so much so, that by 1958, the bank thereof had
receded to a distance of about 105 meters from its original
site, and an alluvial deposit of .9964 hectares, more or less,
had been added to the registered area.
ESTEBAN CALALUNG and DOMINGO CALALUNG were found
to be possessing said alluvium that GRANDE ET AL. filed an
action to quiet title to said portion formed by accretion
against the CALALUNGs. They alleged that they and their
predecessors-in-interest were formerly in peaceful and
continuous possession thereof, until September, 1948, when
the CALALUNGs entered upon the land under claim of
ownership.
The CALALUNGs on the other hand, claimed ownership in
themselves, asserting that they had been in continuous,
open, and undisturbed possession of said portion, since prior
to the year 1933 to the present. Hence, they had already
acquired the property by accretion.
The CFI ruled in favor of GRANDE ET AL. and ordered the
CALALUNGs to vacate the premises of said property. The CA
on the other hand, ruled that the CALALUNGs had rightful
ownership over the contested property by prescription.
ISSUES
(1) Whether or not the alluvium belonged to GRANDE ET AL.
(2) Whether or not the CALALUNGs have acquired the
alluvial property in question through acquisitive prescription.
RULING
(1) YES. That the area in controversy has been formed
through a gradual process of accretion which started in the
early thirties, is a fact conclusively established by the
evidence for both parties. By law, therefore, unless some
superior title has supervened, it should properly belong to
the riparian owners, specifically in accordance with the rule
of natural accession in Art. 366 of the old Civil Code (now
Art. 457), which provides that 'to the owner of lands
adjoining the banks of rivers, belongs the accretion which
they gradually receive from the effects of the current of the
water.
The land in question being an accretion to the mother or
registered land of GRANDE ET AL, the accretion belongs to
the them. Assuming, arguendo that the accretion has been
occupied by the CALALUNGs since 1948, or earlier, is of no
moment, because the law does not require any act of
possession on the part of the owner of the riparian owner,
from the moment the deposit becomes manifest. Further, no
Property Digests (Articles 440 461)
act of appropriation on the part of the riparian owner is
necessary, in order to acquire ownership of the alluvial
formation, as the law does not require the same.
There can be no dispute that both under Article 457 of the
new Civil Code and Article 966 of the old, petitioners are the
lawful owners of said alluvial property, as they are the
registered owners of the land to which it adjoins.
(2) YES. GRANDE ET AL. lost right over the land through
prescription because the CALALUNGs were in possession of
the alluvial lot since 1933 or 1934, openly, continuously and
adversely, under a claim of ownership up to the filing of the
action in 1958.
Just as an unregistered land purchased by the registered
owner of the adjoining land does not, by extension, become
ipso facto registered land. Ownership of a piece of land is
one thing, and registration under the Torrens system of that
ownership is quite another. To acquire Imprescriptibility of
registered land, it must first be registered.
However, in the present case, GRANDE ET AL. failed to
register the contested property. The increment, therefore,
never became registered property, and hence is not entitled
or subject to the protection of imprescriptibility enjoyed by
registered property under the Torrens system.
Consequently, it was subject to acquisition through
prescription by third persons.
3. G.R. No. 178411 June 23, 2010
OFFICE OF THE CITY MAYOR OF PARAAQUE CITY, OFFICE
OF THE CITY ADMINISTRATOR OF PARAAQUE CITY, OFFICE
OF THE CITY ENGINEER OF PARAAQUE CITY, OFFICE OF
THE CITY PLANNING AND DEVELOPMENT COORDINATOR,
OFFICE OF THE BARANGAY CAPTAIN AND SANGGUNIANG
PAMBARANGAY OF BARANGAY VITALEZ, PARAAQUE
CITY, TERESITA A. GATCHALIAN, ENRICO R. ESGUERRA,
ERNESTO T. PRACALE, JR., MANUEL M. ARGOTE, CONRADO
M. CANLAS, JOSEPHINE S. DAUIGOY, ALLAN L. GONZALES,
ESTER C. ASEHAN, MANUEL A. FUENTES, and MYRNA P.
ROSALES, Petitioners,
vs.
MARIO D. EBIO AND HIS CHILDREN/HEIRS namely, ARTURO
V. EBIO, EDUARDO V. EBIO, RENATO V. EBIO, LOURDES E.
MAGTANGOB, MILA V. EBIO, and ARNEL V.
EBIO, Respondents.
Facts: Respondents claim that they are the absolute owners
of a parcel of land consisting of 406 square meters, more or
less, located at 9781 Vitalez Compound in Barangay Vitalez,
Paraaque City and covered by Tax Declaration Nos. 01027
and 01472 in the name of respondent Mario D. Ebio. Said
land was an accretion of Cut-cut creek. Respondents assert
that the original occupant and possessor of the said parcel of
land was their great grandfather, Jose Vitalez.
44

Sometime in 1930, Jose gave the land to his son, Pedro
Vitalez who continuously and exclusively occupied and
possessed the said lot. In 1966, Pedro was able to obtain a
tax declaration over the said property in his name.
Meanwhile, in 1961, respondent Mario Ebio married Pedros
daughter, Zenaida. In April 1964 and in October 1971, Mario
Ebio secured building permits from the Paraaque municipal
office for the construction of their house within the said
compound. On April 21, 1987, Pedro executed a notarized
Transfer of Rights ceding his claim over the entire parcel of
land in favor of Mario Ebio. Subsequently, the tax
declarations under Pedros name were cancelled and new
ones were issued in Mario Ebios name.
On March 30, 1999, the Office of the Sangguniang
Barangay of Vitalez passed Resolution No. 08, series of 1999
seeking assistance from the City Government of Paraaque
for the construction of an access road along Cut-cut Creek.
The proposed road, projected to be eight (8) meters wide
and sixty (60) meters long, will run from Urma Drive to the
main road of Vitalez Compound traversing the lot occupied
by the respondents.
Respondents filed letter-complaints before the Regional
Director of the Bureau of Lands, the Department of Interior
and Local Government and the Office of the Vice Mayor. A
meeting was held to discuss the construction of the
proposed road where respondents asserted their opposition
to the proposed project and their claim of ownership over
the affected property.
On March 28, 2005, City Administrator Noli Aldip sent a
letter to the respondents ordering them to vacate the area
within the next thirty (30) days, or be physically evicted from
the said property.
Threatened of being evicted, respondents went to the RTC of
Paraaque City on April 21, 2005 and applied for a writ of
preliminary injunction against petitioners. In the course of
the proceedings, respondents admitted before the trial court
that they have a pending application for the issuance of a
sales patent before the Department of Environment and
Natural Resources (DENR).
RTC- denied the petition; respondents were not able to
prove that they have an established right to the property
since they have not instituted an action for confirmation of
title and their application for sales patent has not yet been
granted
CA- in favor of respondents; resp have acquired the accreted
portion by virtue of acquisitive prescription. It is clear that
since 1930, they have been in exclusive possession of the
subject property and starting 1964 had introduced
improvements thereon
Issue: who owns the accreted land? Respondents.
Property Digests (Articles 440 461)
Ruling: It is an uncontested fact that the subject land was
formed from the alluvial deposits that have gradually settled
along the banks of Cut-cut creek. This being the case, the law
that governs ownership over the accreted portion is Article
84 of the Spanish Law of Waters of 1866, which remains in
effect, in relation to Article 457 of the Civil Code.
Article 84 of the Spanish Law of Waters of 1866 specifically
covers ownership over alluvial deposits along the banks of a
creek. It reads:
ART. 84. Accretions deposited gradually upon lands
contiguous to creeks, streams, rivers, and lakes, by
accessions or sediments from the waters thereof, belong to
the owners of such lands.
Interestingly, Article 457 of the Civil Code states:
Art. 457. To the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the
effects of the current of the waters.
It is therefore explicit from the foregoing provisions that
alluvial deposits along the banks of a creek do not form part
of the public domain as the alluvial property automatically
belongs to the owner of the estate to which it may have
been added. The only restriction provided for by law is that
the owner of the adjoining property must register the same
under the Torrens system; otherwise, the alluvial property
may be subject to acquisition through prescription by third
persons.
In contrast, properties of public dominion cannot be
acquired by prescription. No matter how long the possession
of the properties has been, there can be no prescription
against the State regarding property of public domain. Even
a city or municipality cannot acquire them by prescription as
against the State.
Hence, while it is true that a creek is a property of public
dominion, the land which is formed by the gradual and
imperceptible accumulation of sediments along its banks
does not form part of the public domain by clear provision of
law.
We also find that the character of possession and ownership
by the respondents over the contested land entitles them to
the avails of the action.
In the case at bar, respondents assert that their predecessor-
in-interest, Pedro Vitalez, had occupied and possessed the
subject lot as early as 1930. In 1964, respondent Mario Ebio
secured a permit from the local government of Paraaque
for the construction of their family dwelling on the said lot.
In 1966, Pedro executed an affidavit of possession and
occupancy allowing him to declare the property in his name
for taxation purposes. Curiously, it was also in 1966 when
Guaranteed Homes, Inc., the registered owner of Road Lot
No. 8 (RL 8) which adjoins the land occupied by the
respondents, donated RL 8 to the local government of
Paraaque.
45

From these findings of fact by both the trial court and the
Court of Appeals, only one conclusion can be made: that for
more than thirty (30) years, neither Guaranteed Homes, Inc.
nor the local government of Paraaque in its corporate or
private capacity sought to register the accreted portion.
Undoubtedly, respondents are deemed to have acquired
ownership over the subject property through prescription.
Respondents can assert such right despite the fact that they
have yet to register their title over the said lot. It must be
remembered that the purpose of land registration is not the
acquisition of lands, but only the registration of title which
the applicant already possessed over the land. Registration
was never intended as a means of acquiring ownership. A
decree of registration merely confirms, but does not confer,
ownership.
4. G.R. No. 160453 November 12, 2012
REPUBLIC OF THE PHILIPPINES, Petitioner, vs.
ARCADIO IVAN A. SANTOS III, and ARCADIO C. SANTOS,
JR., Respondents.
By law, accretion - the gradual and imperceptible deposit
made through the effects of the current of the water-
belongs to the owner of the land adjacent to the banks of
rivers where it forms. The drying up of the river is not
accretion. Hence, the dried-up river bed belongs to the State
as property of public dominion, not to the riparian owner,
unless a law vests the ownership in some other person.
Facts: Respondent Arcadio Ivan A. Santos III (Arcadio Ivan)
applied on March 7, 1997 for the registration of Lot 4998-B
(the property) in the Regional Trial Court (RTC) in Paranaque
City. The property, which had an area of 1,045 square
meters, more or less, was located in Barangay San Dionisio,
Paraaque City, and was bounded in the Northeast by Lot
4079 belonging to respondent Arcadio C. Santos, Jr.
(Arcadio, Jr.), in the Southeast by the Paraaque River, in the
Southwest by an abandoned road, and in the Northwest by
Lot 4998-A also owned by Arcadio Ivan.
He alleged that the property had been formed through
accretion and had been in their joint open, notorious, public,
continuous and adverse possession for more than 30 years.
The City of Paraaque (the City) opposed the application for
land registration, stating that it needed the property for its
flood control program; that the property was within the legal
easement of 20 meters from the river bank; and that
assuming that the property was not covered by the legal
easement, title to the property could not be registered in
favor of the applicants for the reason that the property was
an orchard that had dried up and had not resulted from
accretion.
RTC- granted the application for registration
CA- affirmed RTC
Property Digests (Articles 440 461)
Issue: Was there accretion? NO.
Ruling: Accretion is the process whereby the soil is
deposited along the banks of rivers. The deposit of soil, to be
considered accretion, must be:
(a) gradual and imperceptible;
(b) made through the effects of the current of the water;
and
(c) taking place on land adjacent to the banks of rivers.
Accordingly, respondents should establish the concurrence
of the elements of accretion to warrant the grant of their
application for land registration.
However, respondents did not discharge their burden of
proof. They did not show that the gradual and imperceptible
deposition of soil through the effects of the current of the
river had formed Lot 4998-B. Instead, their evidence
revealed that the property was the dried-up river bed of the
Paraaque River, leading both the RTC and the CA to
themselves hold that Lot 4998-B was "the land which was
previously part of the Paraaque River xxx (and) became an
orchard after it dried up."
Respondents did not establish at all that the increment of
land had formed from the gradual and imperceptible
deposit of soil by the effects of the current. Also, it seems
to be highly improbable that the large volume of soil that
ultimately comprised the dry land with an area of 1,045
square meters had been deposited in a gradual and
imperceptible manner by the current of the river in the span
of about 20 to 30 years the span of time intervening
between 1920, when Lot 4 was registered in the name of
their deceased parent (at which time Lot 4998-B was not yet
in existence) and the early 1950s (which respondents
witness Rufino Allanigue alleged to be the time when he
knew them to have occupied Lot 4988-B). The only plausible
explanation for the substantial increment was that Lot
4988-B was the dried-up bed of the Paraaque River.
Confirming this explanation was Arcadio, Jr.s own testimony
to the effect that the property was previously a part of the
Paraaque River that had dried up and become an orchard.
The RTC and the CA grossly erred in treating the dried-up
river bed as an accretion that became respondents property
pursuant to Article 457 of the Civil Code. That land was
definitely not an accretion. The process of drying up of a
river to form dry land involved the recession of the water
level from the river banks, and the dried-up land did not
equate to accretion, which was the gradual and
imperceptible deposition of soil on the river banks through
the effects of the current. In accretion, the water level did
not recede and was more or less maintained. Hence,
respondents as the riparian owners had no legal right to
claim ownership of Lot 4998-B. Considering that the clear
and categorical language of Article 457 of the Civil Code has
confined the provision only to accretion, we should apply
the provision as its clear and categorical language tells us to.
46

Axiomatic it is, indeed, that where the language of the law is
clear and categorical, there is no room for interpretation;
there is only room for application. The first and fundamental
duty of courts is then to apply the law.
The State exclusively owned Lot 4998-B and may not be
divested of its right of ownership. Article 502 of the Civil
Code expressly declares that rivers and their natural beds
are public dominion of the State. It follows that the river
beds that dry up, like Lot 4998-B, continue to belong to the
State as its property of public dominion, unless there is an
express law that provides that the dried-up river beds should
belong to some other person.
5. G.R. No. 98045 June 26, 1996
DESAMPARADO VDA. DE NAZARENO and LETICIA
NAZARENO TAPIA, petitioners, vs. THE COURT OF APPEALS,
MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA,
AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I.
IGNACIO, ALBERTO M. GILLERA and HON. ABELARDO G.
PALAD, JR., in their official and/or private
capacities, respondents.
Facts: The subject of this controversy is a parcel of land
situated in Telegrapo, Puntod, Cagayan de Oro City. Said
land was formed as a result of sawdust dumped into the
dried-up Balacanas Creek and along the banks of the
Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and
Leo Rabaya leased the subject lots on which their houses
stood from one Antonio Nazareno, petitioners' predecessor-
in-interest. In the latter part of 1982, private respondents
allegedly stopped paying rentals. As a result, Antonio
Nazareno and petitioners filed a case for ejectment with the
MTC of CDO. A decision was rendered against private
respondents, which decision was affirmed by the RTC of
Misamis Oriental.
Private respondents filed a case for annulment of judgment
before the RTC of Misamis Oriental which dismissed the
same. The decision of the lower court was finally enforced
with the private respondents being ejected from portions of
the subject lots they occupied.
Before he died, Antonio Nazareno caused the approval by
the Bureau of Lands of the survey plan designated as Plan
Csd-106-00571 with a view to perfecting his title over the
accretion area being claimed by him. Before the approved
survey plan could be released to the applicant, however, it
was protested by private respondents before the Bureau of
Lands.
In compliance with the order of respondent District Land
Officer Alberto M. Gillera, respondent Land Investigator
Avelino G. Labis conducted an investigation and rendered a
report to the Regional Director recommending that Survey
Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302,
Property Digests (Articles 440 461)
Cad. 237) in the name of Antonio Nazareno, be cancelled
and that private respondents be directed to file appropriate
public land applications.
Based on said report, respondent Regional Director of the
Bureau of Lands Roberto Hilario rendered a decision
ordering the amendment of the survey plan in the name of
Antonio Nazareno by segregating therefrom the areas
occupied by the private respondents who, if qualified, may
file public land applications covering their respective
portions.
Antonio Nazareno filed a MFR which was denied.
Respondent Director of Lands Abelardo Palad then ordered
him to vacate the portions adjudicated to private
respondents and remove whatever improvements they have
introduced thereon. He also ordered that private
respondents be placed in possession thereof.
Pet filed mfr- rtc dismissed
The administrative decision of the Bureau of Lands became
final.
On appeal, the Court of Appeals affirmed the decision of the
RTC dismissing the complaint.
Issue: 1. Was there accretion in the case at bar? NO. (WON
the subject property formed part of the property of
Nazareno through accretion)
2. Whether or not the subject land is public land? YES.
Ruling:
1. In the case of Meneses v. CA, this Court held that
accretion, as a mode of acquiring property under Art. 457 of
the Civil Code, requires the concurrence of these requisites :
(1) that the deposition of soil or sediment be gradual and
imperceptible;
(2) that it be the result of the action of the waters of the
river (or sea); and
(3) that the land where accretion takes place is adjacent to
the banks of rivers (or the sea coast).
These are called the rules on alluvion which if present in a
case, give to the owners of lands adjoining the banks of
rivers or streams any accretion gradually received from the
effects of the current of waters.
For petitioners to insist on the application of these rules on
alluvion to their case, the above-mentioned requisites must
be present. However, they admit that the accretion was
formed by the dumping of boulders, soil and other filling
materials on portions of the Balacanas Creek and the
Cagayan River bounding their land. It cannot be claimed,
therefore, that the accumulation of such boulders, soil and
other filling materials was gradual and imperceptible,
resulting from the action of the waters or the current of the
Balacanas Creek and the Cagayan River. In Hilario v. City of
Manila, this Court held that the word "current" indicates
the participation of the body of water in the ebb and flow of
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 Property Digests (Articles 440 461)
waters due to high and low tide. Petitioners' submission not
having met the first and second requirements of the rules on
alluvion, they cannot claim the rights of a riparian owner.

The accretion was man-made or artificial. In Republic

v. CA, this Court ruled that the requirement that the deposit
should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil Code
all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of nature.
Thus, in Tiongco v. Director of Lands, et al., where the land
was not formed solely by the natural effect of the water
current of the river bordering said land but is also the
consequence of the direct and deliberate intervention of
man, it was deemed a man-made accretion and, as such,
part of the public domain.

2. In the case at bar, the subject land was the direct result of
the dumping of sawdust by the Sun Valley Lumber Co.
consequent to its sawmill operations. Even if this Court
were to take into consideration petitioners' submission that
the accretion site was the result of the late Antonio
Nazareno's labor consisting in the dumping of boulders, soil
and other filling materials into the Balacanas Creek and
Cagayan River bounding his land, the same would still be
part of the public domain.

Having determined that the subject land is public land,

a fortiori, the Bureau of Lands, as well as the Office of the
Secretary of Agriculture and Natural Resources have
jurisdiction over the same in accordance with the Public
Land Law.

Vda de Nazareno et al were estopped from denying the

public character of subject land, as well as the jurisdiction of
the Bureau of Lands when the late Antonio Nazareno filed
his Miscellaneous Sales Application. The mere filing of said
application constituted an admission that the land being
applied for was public land, having been the subject of a
survey plan.

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